stop loss. why????

[ZEN archer]

I don't believe it, as if trading without stops hasn't been tried before

I've heard of some traders (and fund managers) who use hedging instead of stops.

BTW I haven't tried that - still using old fashioned stops

 

[jeffre4]

i believe that there is a target at 5260 which will be hit as i said time well tell. i wont post again until it does so maybe never. good luck to you all (ps ftse will hit 5821 today and then 5660ish this week in my humble opinion

 

[new_trader]

I've heard of some traders (and fund managers) who use hedging instead of stops.

BTW I haven't tried that - still using old fashioned stops

But isn't hedging by fund managers used to save on the transaction costs incurred by turnover of stock portfolios? If they expect a downturn in the markets, rather than sell out of their stocks it is easier to hedge by using derivatives. This is different to someone not wanting to realise a loss on a misjudged short position...which I imagine the OP is doing.

 

[BeginnerJoe]

I reckon the EURO is resuming the bull run on completing a retrace. So FTSE will be following higher.

 

[Hoggums]

no stops, averaging down...

Have you considered trying martingale, it will hasten the inevitable end result?

There was a chap called Spanish89 who tried this tactic, basically same thinking as you, why the hell take the loss at -40% when it will come back and give me that 4% profit.

I think he's still waiting....

 

[ian23]

i believe that there is a target at 5260 which will be hit as i said time well tell. i wont post again until it does so maybe never. good luck to you all (ps ftse will hit 5821 today and then 5660ish this week in my humble opinion

OH dear, I thought you were doing my 100k stock trading theory, but it seems you are looking to blow out your account. Just out of interest, how much will you let the FTSE go against you before you will realize the loss. Or will you just hold it until your account goes to zero if the FTSE decides to go into a bull cycle and never return to these levels?

 

[Hoggums]

i believe that there is a target at 5260 which will be hit as i said time well tell. i wont post again until it does so maybe never. good luck to you all (ps ftse will hit 5821 today and then 5660ish this week in my humble opinion

That short position on the FTSE is also costing you money every day.

I presume you are using a rolling daily contract which will cost you approx 5-6pips per week, not to mention losses from dividend adjustments. If it take 3 years to reach 5260 then with all the charges you've paid you won't be anywhere near in profit.

 

[jeffre4]

no all dec contract

 

[jeffre4]

you think 5260 is 3 yrs off?? we will see

 

[Hoggums]

People have tried to give you advice but as usual it's the "I know better than all of you" syndrome.

Your plan is fool proof except for if your prediction is wrong. What if it never reaches 5260? That may be unlikely in your view - but if by some small chance it doesn't get there and reaches 7000 first then you are bust.

And the longer you trade this way the more likely it will be that this happens to you.

That's not a sustainable trading strategy.

 

[BeginnerJoe]

you think 5260 is 3 yrs off?? we will see

Why 5260 ? Retesting of the low ? There's no chance it will happen by December, if ever - since the lows are rising.

They have already announced in the news they want the prices higher by Christmas. There's not going to be a major retest until they say the market needs a correction.

 

[Splitlink]

The OP is doing long term trades where intermittent internet outage isn't a problem. What he's got is basically a hold until win strategy where a single loose could wipe out his account because he would not take a loose for an answer. Sooner or later, as it does now, the market wouldn't stop going in one direction against him. So we have a cry for help.

All too often, people over-estimate their capacity to withstand the market going against them and stop losses can help in that situation. If you are going to be forced out anyway, it's better to get out early.

Ok, I get you. The problem that I see with that is that you can hold the position for as long as you like and still end up losing money, even with a stop on. If the stop was 100 points away and you, finally, closed because of boredom, if nothing else, you could still get stopped out with a loss of anything---60 points, and will have lost both money and time on that trade. The time wasted could be days , weeks or more.

Horses for courses. That is not for me.

 

[BeginnerJoe]

Ok, I get you. The problem that I see with that is that you can hold the position for as long as you like and still end up losing money, even with a stop on. If the stop was 100 points away and you, finally, closed because of boredom, if nothing else, you could still get stopped out with a loss of anything---60 points, and will have lost both money and time on that trade. The time wasted could be days , weeks or more.

Horses for courses. That is not for me.

Losses are inevitable whether from boredom or anything else. Cutting them short is the only option available that would work over the long run. Otherwise it would a case of make money for 3 years and blowing the lot on the 4th year ***IN A SINGLE TRADE*** - a lot of work for nothing. What is the chance of making 1 error in 4 years ? 99.99%.

 

[ian23]

Stop loss, Why? Well because the market perception may change before it gets to your target. I for one will not want to be short FTSE right now with real money on the line. Who wants to sit through this rally with a short on?

 

[Splitlink]

Losses are inevitable whether from boredom or anything else. Cutting them short is the only option available that would work over the long run. Otherwise it would a case of make money for 3 years and blowing the lot on the 4th year - a lot of work for nothing.

I agree. Ten losing trades with 8 point losses equals 80 points. A hell of a loss. for me, at any rate but, at the very least you get to know fast that you ain't doin' somethin' right. That is better than hanging on, taking a loss and not knowing whether your method was right or wrong at the end of it.

 

[BeginnerJoe]

I agree. Ten losing trades with 8 point losses equals 80 points. A hell of a loss. for me, at any rate but, at the very least you get to know fast that you ain't doin' somethin' right. That is better than hanging on, taking a loss and not knowing whether your method was right or wrong at the end of it.

Stops also have the psychological benefit of preventing erosion of discipline, in that people might think well I am down so much anyway, losing a bit more makes no difference and might as well hold on and hope for it to come back. This of course is deadly.

 

[StockHunter]

No one is ever 100% right all the time, stop losses are part of risk management which is the #1 thing in trading. If you don't have risk management you will fail.

 

[Lickyluciano]

First of all, let me say I absolutely agree that stops are a must for trading.
I was wondering how does everyone deal with gap downs.....i trade stocks and it has happened to me 2 times where the stock opened 10-15% lower because of some overnight news. These stocks eventually recovered completely over time but the real **** off for me was that they opened at more than 10% lower than the previous close and recovered to 7-8% down by the end of the day which was much better than my stop point.

 

[BeginnerJoe]

First of all, let me say I absolutely agree that stops are a must for trading.
I was wondering how does everyone deal with gap downs.....i trade stocks and it has happened to me 2 times where the stock opened 10-15% lower because of some overnight news. These stocks eventually recovered completely over time but the real **** off for me was that they opened at more than 10% lower than the previous close and recovered to 7-8% down by the end of the day which was much better than my stop point.

Some prices recover, others don't, and there's no way to know what will happen to which. For the latter, stops protect you from unlimited moves against you. The unlimited moves will kill you instantly. Losses to stop hunts and market plays will not. You can consider the cost of stop hunts as payment for insuring against an instant kill. As for dealing with market plays, you can diversify to ensure your account valuation is not adversely affected by funny business taking place for any one stock in your portfolio. Paying for market plays is the cost of doing business and can't be avoided. Although you can theoretically lessen the cost by being able to pick to enter a position when there is minimum probability of plays occurring. For instance, in a roaring rally, plays in the downward direction would be curtailed significantly in duration and depth. Also, generally speaking, large stocks are less likely to be candidates for price spike plays. So if you don't like spikes, try bigger stocks.

 

[Legendary]

hw does this stop loss really works in trading forex?