I like this a lot.
Depth Trade
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Does one need a StopLoss? Not necessarily.
When you have money sitting in a bank account, you have zero StopLoss. Your account value is constantly changing, just look at the price that gasoline or any commodity changes. One can not control this.
If one is trading on a short time frame, one is usually then trading on leverage, using a previous Price Extreme as there Stop. Hence the leverage, because their Stop will be a certain % (1-3%) of their account value and if they traded 100% of their account value with a small movement as their stop, it would only represent a tiny % of their account. Not enough to be a "real" trade as normally defined (1-3%)
..So if one is positioning their entire account value at 100% with no Stop, there is no difference as having the 100% of the balance sitting in a bank account with the purchasing value fluctuating.
The only variable, is what you then plan on buying. If you plan on buying a commodity with profits, you might as well be positioning yourself 100% in any product, because your purchasing power is moving anyhow.
If you plan on buying Electronics or Grocery shopping, the price is not going to move in conjunction with their manufacturing materials, because people would be turned off buy the constant change in pricing.
..So as far I am see it, it really matters what you are doing and are going to do with your profits.
To say it is absolute that you need a Stop Loss is not true.
When you have money sitting in a bank account, you have zero StopLoss. Your account value is constantly changing, just look at the price that gasoline or any commodity changes. One can not control this.
If one is trading on a short time frame, one is usually then trading on leverage, using a previous Price Extreme as there Stop. Hence the leverage, because their Stop will be a certain % (1-3%) of their account value and if they traded 100% of their account value with a small movement as their stop, it would only represent a tiny % of their account. Not enough to be a "real" trade as normally defined (1-3%)
..So if one is positioning their entire account value at 100% with no Stop, there is no difference as having the 100% of the balance sitting in a bank account with the purchasing value fluctuating.
The only variable, is what you then plan on buying. If you plan on buying a commodity with profits, you might as well be positioning yourself 100% in any product, because your purchasing power is moving anyhow.
If you plan on buying Electronics or Grocery shopping, the price is not going to move in conjunction with their manufacturing materials, because people would be turned off buy the constant change in pricing.
..So as far I am see it, it really matters what you are doing and are going to do with your profits.
To say it is absolute that you need a Stop Loss is not true.
Steven2805
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Actually I have a stop loss for my money in the bank, it's called investments like property. Gold and silver. If the currancy for what ever reason was to become worthless or devalued I would have a stop loss in the form of assets.
The same applies to trading place a stop limits your risk to the market, say you buy 1000 shares at £200 each that's £200k capital at risk, the stock drops 50%. You lose 100k, where as the guy with the stop only loses 10k.
Am not saying your right or wrong, just giving food for thought.
Also your point about gas prices, people do combat the fluctuation. Well not indeviduals but companies and farmers do by buying futures. Buying a future secures the currant price and stops them having to pay more in the future. There are stop losses for many things But they aren't always called a stop loss.
Whether you make money working 9till 5 or trading, it's not how much you earn it's what you do with it once it's yours. Buying a TV won't help you in 1 months time but buying a silver coin might just pull you through some extra cash. Don't get me wrong buying gifts for yourself is wonderful but capital preservation comes first always. Deny that and your on thin ice...
Kind regards
The same applies to trading place a stop limits your risk to the market, say you buy 1000 shares at £200 each that's £200k capital at risk, the stock drops 50%. You lose 100k, where as the guy with the stop only loses 10k.
Am not saying your right or wrong, just giving food for thought.
Also your point about gas prices, people do combat the fluctuation. Well not indeviduals but companies and farmers do by buying futures. Buying a future secures the currant price and stops them having to pay more in the future. There are stop losses for many things But they aren't always called a stop loss.
Whether you make money working 9till 5 or trading, it's not how much you earn it's what you do with it once it's yours. Buying a TV won't help you in 1 months time but buying a silver coin might just pull you through some extra cash. Don't get me wrong buying gifts for yourself is wonderful but capital preservation comes first always. Deny that and your on thin ice...
Kind regards
rsh01
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what happens if gold/silver becomes worthless? wheres your stop loss?
jacknapier
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The only way gold/silver would become worthless would be if there was a doomsday/Mad Max scenario where the only currency would be how many bullets were left in your clip. Even then, I couldn't possibly imagine that nobody would want to trade or barter. But you can be sure that in such a scenario nobody would accept paper with numbers written on them by a defunct government. So, I take it back, the only way gold/silver will become worthless is in the event of human extinction.
BeginnerJoe
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Then his property would have stopped a total loss. On the other hand if he property became worthless, his silver and gold would have stopped a total loss. He knows what he's talking about.
But most people are gamblers, if disaster strikes such as wars, earthquakes, meteor strikes, they would have suffered a total loss as their money is not spread out or they don't haven enough money to spread it all out.
As for the OP, he still has a month before his contracts expire. No total loss yet and the market is moving lower in his favour. There remains a chance that he was right to not have a stop loss.
Steven2805
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Thank you for backing me up on this one.
Besides if Gold & Silver was to become worthless as you ask rsh01 it's not really a question of "where my stop loss is". Because how could you combat an entire global collapse, yes property "might" be worth something or be taken off you by the state. Paper money would be worth less than toilet paper and I suppose I could throw £2 coins at people as a defense weapon
You could start investing in stock piles of food and water now, but if we ever need to use it then it's not a case of capital preservation but rather life preservation.
Gold & silver have been used as money for thousands of years, long before paper money. I don't see any logical reason that Gold would become worthless. Unless as previous mentioned above by me, BeginnerJoe and jacknapier.
Hopefully that answers your question.
I like your point Joe, people are gamblers. I may not have used gamblers, rather living in a bubble where nothing can affect them or there bank account. Ever heard the saying "spread the wealth" normally it's used in the context of sharing wealth among individuals (taking from the rich and giving to the poor). I don't see it that way. Spread the wealth among different assets, don't keep all your eggs in one basket because if you drop it... well you get the point.
On the topic of the OP, yes it might work this time. But my question is how many times will it work. One thing am hoping is others don't follow by example, especially if they don't take the time to properly assess the risks.
Lacanau
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They can be very handy tools, though if you're dealing with a market maker broker, then the stop losses you put in place are visible to the broker, and I have heard mention of certain brokers *pushing* the markets in certain directions on a fraction in an act that is called stop hunting.
jacknapier
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Hmm... My experience from paper trading tells me that stops get taken out because market participants all put the same stop in and not because someone is actively taking them out, as would be impossible to take a stop out that only exists in my notes, but oddly gets hit anyway. And as soon as all the participants are "all in" the only orders left are the stops, so then it becomes like a vacuum and the stops get taken out by market orders. Maybe my theory is wrong... I'm not exactly an expert. It just seems to me a more rational explanation then a conspiracy of market makers.
Steven2805
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First of all, the point about having no confidence in your set-up. That comment gave me a right old laugh.
If you "jeffre4" have a strategy with 100% wins then feel free to share
Most strategies have an element of failing, ever heard of win/lose ratio. It's quite a common element in trading.. Living with your losers but not letting them wipe you out.
Placing a stoploss has zero to do with not being confident in your entry. Just like mobile phone insurance, I don't intend to lose my phone but just in case ill pay extra for insurance.
Lastly the point about market makers pushing to people stops.
It's quite an in depth area and would require a lot of time to go into detail, however I will try explain the basics.
Human nature often dictates where people place stops, round number or just below resistance for example. One market spike can cause a snowball effect triggering stops on its way down which in turn makes it gather momentum. However to think your broker or market maker is singling your 1 trade out and moving there system to stop you out is quite silly. Why would they care whether you have the potential to make 10k, for every trade place up there is an equal trade down. They make money from both trades, perhaps if your trading in the hundreds of thousands then you might be right but even then they still make money. (commission and/or spread)
But once again the above is only my view, you are more than welcome to disagree.
Kind Regards
Knell
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I've read your post 3times now and still don't get your point!! WTF has a stop loss got to do with your bank account, electronics or groceries? Are you comparing a stop loss to inflation? I bet you Richard Fuld never had a stop loss...
My personal view is a trader with no stop loss is an arrogant trader who thinks they will always be right! Same as a tightrope walker with no net, they are only one step from wipe out..this can not be a serious consideration of any trader, well, long term trader anyway...seriously..
Knell
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There is one thing certain in this world, gold ever being worthless is impossible!!
But, I get your point...
Knell
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Lacanau
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I only say this as from recent experiences with forex spread betting firms and their attitudes towards clients who make consistent profits. Simply put, the don't like them
Steven2805
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No, please go into the detail, forget the basics..this should be good
Until you start paying me for my time and knowledge the basics will be your limit, am not here to teach you about every corner of the market
Lacanau
I see where your coming from, however it makes more sense for the broker to become angry when you try to withdraw money.Which I have had in the past.
What kind of experiences have you had if you don't mind sharing.
Kind Regards
jacknapier
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I've read your post 3times now and still don't get your point!! WTF has a stop loss got to do with your bank account, electronics or groceries? Are you comparing a stop loss to inflation? I bet you Richard Fuld never had a stop loss...
I think what he's saying is something to the effect of, if you have 10,000$ in you bank account today, you could buy a used car. It wasn't too long ago you could buy a new car with the same amount of money. I suppose it's a little hard to wrap your head around because you can't put a stop loss on a savings account. What would your cash convert into? I don't see how you could retain that buying power your account had when you could buy a new car for 10k.
I don't think what he's talking about is inflation. I believe ol' helicopter Ben when he says there is very little inflation. The problem is the dollar does not have the buying power it once had because of skyrocketing commodity prices.
kawaman
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That explanataion seems to me more rational than stops taken out by the broker, but I am sure there are fraudulent broker firms that can drain your money in some way. Therefore it is worth examining the broker before opening a live account.
Check where it is registered! Which organisation it is regulated by (like the FSA in the UK)? Is it DD (Dealing Desk) or NDD (Non Dealing Desk) broker?
Some trader use mental stoploss instead of normal stoploss to avoid "stop hunting". They keep in mind their stoploss level and they automaticly closes position when the price hits that level.
To tell you the truth I don't think it is a good solution, because if we assume that "stop hunting" exists that means that we can find thousands of stoplosses in a relatively narrow zone. If you don't put stop loss, but keep in mind the level, still thousands of stoplosses will be in that zone that can be hunted. So the price goes down (or up) reach your mental stoploss and you must close your position. Threfore besides you must sit all day nex to your PC to take care of your position and must be very disciplined and yet it won't work.
It would work if all traders used it.
BeginnerJoe
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Since when is filling stop orders fraudulent ? Filling an order is to supply a demand. It's the normal activity of the market. Filling stop orders is not only a normal function of the market, but it also guarantees profits for those doing it.
To believe they don't want to fill your stop order is funny to say the least.
