Question on stop limits etc

[Vint]

I still haven't spread betted with real money yet, but I was wondering..

if I were to bet that gold would go up in value (buy), why would I even want a stop limit at all? I may as well let it keep going, because even if it does make me go minus 500% or whatever resulting in a loss, EVENTUALLY the value of gold is going to go up - it kinda has to.

yeah I could be waiting a year or two if it was bad, but even in a case as bad as that, I'm still going to make my money back..

the same doesn't really go for other markets but silver/gold surely you don't need a stop limit because they're always going to go up in the end..

second Q: why are all the markets closed right now? is it because of my particular broker or is it because it's the weekend and everything closes consequently?

 

[Shakone]

Why is it that it "kinda has to" go up?

What about the person who bought say GBPUSD in Nov 2007 thinking like you did? Now 3-4 years later, that person has had to pay all kinds of rollover costs, and can't use that money for any trades. There is no guarantee it will EVER come back to the value he bought it at, and so the capital has been tied up for years. If you want to trade, you need your capital available to trade, not tied up.

It's because it is the weekend.

 

[Vint]

thanks for the answer.

I guess you're right, but what about gold/silver? To me it looks like it's going to continually go up?

I know your investment would be tied up for a while if things went bad for a while, but gold and silver are likely to go up consistently..

yes I'd never think like this with currencies, I was thinking commodities moreso.

 

[Shakone]

The problem is in the word 'likely'. Yes they may be likely to go up, or even if they go down, to retest where you entered. But consider a commodity then, like Crude Oil. When it was over $140 a barrel in the middle of 2008, wouldn't you have said that looks like it's going to continuously go up? And then would you have held it all the way to the lows in 2009, still hoping in 2011 that it would come back. Even at £1 per point, that would have tied up more than 10k, plus you'd have had rollover costs to pay, and still be waiting. And what are you expecting to gain with it? The risk reward isn't sounding too great.

I think it very likely it will get back to over $140 a barrel, but it's still not worth not having a stop.

 

[Vint]

okay.. I'm just going to be really scared about putting in a stop too low, because I might lose money just because of a short term dip, when if I didn't have a stop I could just wait and take a profit later on..

then again I could take an even bigger loss later on.. something to think about I guess

 

[wackypete2]

Mr Vint, you are a trading system vendor asking these kinds of questions??

What are you selling?

Peter

 

[Vint]

Sorry no I'm not, it asked me to make a title during registration and none of them suited me ha.

I'll try and change it when I have some time, probably can from user CP

 

[wackypete2]

Sorry no I'm not, it asked me to make a title during registration and none of them suited me ha.

I'll try and change it when I have some time, probably can from user CP

So, you're just an idiot instead. Thanks for confirming.

Peter

 

[Vint]

So, you're just an idiot instead. Thanks for confirming.

Peter

I'm not an idiot, I'm just 16.

edit
fixed

 

[enragedcow]

you set stop losses because otherwise you go bankrupt

simple as that, commodities increase in price yes but by going long and just "sticking it out" you're simply giving away you're money when the commodity in question crashes

for example, sugar, big floody/cyclones/terrorists?/australians? in queensland destroyed sugar crop and now india had a bumper season so the price crashed again

and if you'rte using a leveraged product... MARGIN CALL

what you say is basically the biggest problem NZ's economy faces; ignorant "mum and dad" investors go long on whatever instrument thinking a "buy and hold" strategy works, capital is blown up consequently our capital markets just aint worth touching

a stop loss is the most important thing for a trader, you're wrong? get out and get out fast before your capital flies away

you can always set a stop at a level that will only be hit if you are COMPLETELY wrong about the direction the price will go, then switch your position if it hits that level