Stop losses question.

[Iotrez]

Hi all,

I realise that most people have a stop loss close to where they open a position. But what if you are making short term trades over a time frame of minutes and you open a position expecting the price to rise but instead it goes down.

If over a larger time frame(say 30 mins) the trend looks like it is definitely down and the indicators are suggesting that, do some people ever make the decision try and allow their trade to catch that longer term trend, rather than just cutting their losses?

Or should you always set stop losses so that your trade ends as soon as it goes the opposite way to what you expect by a specific amount?

Thanks.

 

[gfrost]

From my own personal experience, I think moving your stop is a very dangerous thing to do. The temptation is to think, if it continues to move against you, I can't close it now, I will just wait for it to rebound a little. If it continues to move against you, it gets harder and harder to close as you have lost so much more than originally anticipated.
There is a thread under spread betting where this has happened and the losses have snowballed. Now the Op is stuck with massive losses hoping that the price returns in their favour.
I have moved stops with success but you have to be very disciplined, something I am not always good at

Graham

 

[tomorton]

Hi lotrez -

A rational place to put your stop based on TA is to be preferred over a random training percentage or points figure. Ideally, your stop should be at the earliest place where price would have to get to in order to convince you that the reasons for getting into that position have now changed. Ater all, if you wouldn't be buying there, why would anyone else?

This is very hard to do in practice and when you are unhappy with the stop's position, you might fall back on the default money management rule that a triggered stop does not lose you more than 1% of your trading capital. Some people say 2%, but the idea is that when you have a series of triggered stops, these do not severely damage your account. Stops are another kind of success, and you don't want to be so successful you blow up.

 

[theSheik]

gfrost is right

In my experience, moving your stop in very short-term positions is an undisciplined trading style and compounds your losses.

If you exceed your stop, close out and re-enter the trade if neccessary.

that should be a golden rule in your overall trading strategy in my book.

 

[Bolimomo]

If over a larger time frame(say 30 mins) the trend looks like it is definitely down and the indicators are suggesting that, do some people ever make the decision try and allow their trade to catch that longer term trend, rather than just cutting their losses?

One should never loosen the stop. If you do, you have violated your own trading plan. You can close out a position before a stop is hit if you don't feel right about the direction. But those who keep broadening their stops... they call themselves "long term investors". And there are plenty of those "long term investors"... such as those who bought QCOM at $200 (before split of $800) in 2000 and still hold it today at $35 because they have been thinking: "as soon as the stock price goes back up to my buy price I would sell. And I really haven't 'lost' because I haven't 'sold'"

 

[StockHunter]

In my daytrading I always move my stops, but this is based off of support/resistance or past candles and AFTER I'm at a .50% gain or better.

 

[0007]

From my own personal experience, I think moving your stop is a very dangerous thing to do. The temptation is to think, if it continues to move against you, I can't close it now, I will just wait for it to rebound a little. If it continues to move against you, it gets harder and harder to close as you have lost so much more than originally anticipated.
There is a thread under spread betting where this has happened and the losses have snowballed. Now the Op is stuck with massive losses hoping that the price returns in their favour.
I have moved stops with success but you have to be very disciplined, something I am not always good at

Graham

Agree. IMHO moving stops (not trailers) is a dangerous game and basically means you didn't get it right in the first place. If you keep wanting to move them then examine why they are in the wrong place and modify your processes. Otherwise, stick to them: its cheaper in the long run - "I know, for I was that man"

 

[foredog]

Hi all,

I realise that most people have a stop loss close to where they open a position. But what if you are making short term trades over a time frame of minutes and you open a position expecting the price to rise but instead it goes down.

If over a larger time frame(say 30 mins) the trend looks like it is definitely down and the indicators are suggesting that, do some people ever make the decision try and allow their trade to catch that longer term trend, rather than just cutting their losses?

Or should you always set stop losses so that your trade ends as soon as it goes the opposite way to what you expect by a specific amount?

Thanks.

You got in short term it's gone wrong, get out, you didn't enter with a long term vieew so why have one now you're doing money?

If you get on the M25 intending to go 2 junctions clockwise but find you're going anticlockwise do you:

A Keep going round all 30 junctions

B Get off at the next junction and get back on the right track

(For those not from the UK the M25 is a LARGE motorway/freeway thats runs around the outside of greater London)

 

[bnaimy]

A simple answer to a simple question.

When you take a trade based on TA, then put your stop a few ticks below that place that made you decide to take that trade. Because if price then goes there again, then there is no reason to take that trade anymore and thats it.
Moving your stop lower should not be neeed if u had put it on the right place to begin with.

With kind regards
Bashir Naimy

 

[DeadMoney]

I have done that...

Buy based on a 5 minute chart, it goes against me.
I then find something on a 15 minute chart to justify staying in the trade,
it goes against me.
look at the hourly chart for something to stay in the trade.
it goes against me,
decided to hold it over night and see how it looks on the open in the morning.
ok, now it's down huge and I will just hold it as a position trade until it comes back in a few weeks.

every time I have done this it has ended badly.

 

[welshman]

guys hope you don t mind me asking but what is a sensible stop to place oviously it does depend on the money staked but 5 points to 20 where would you place these stops between that scale

 

[yoramv]

Stop loss placement

guys hope you don t mind me asking but what is a sensible stop to place oviously it does depend on the money staked but 5 points to 20 where would you place these stops between that scale

Hi, why not test your strategy for at least 40 trades and see how mauch u have had risked in order to get to your target. then u have statistical measurement of where to place your stop.Believe me its working like a rock.By the way this is an idea i got from Joe Ross and it is perhaps the best idea of placing stops that i came upon.

 

[everyonerich]

can someone pool up to a billion, then we can trade for guaranteed profits.. lulz

profit can made in less than 10 min, but this is demo only thou..

 

[Bolimomo]

can someone pool up to a billion, then we can trade for guaranteed profits.. lulz

profit can made in less than 10 min, but this is demo only thou..

This has caught my eyes. (1) What kind of instrument can you trade to get a $172,000 profit in 10 minutes? (2) How much is the required capital?

 

[jluanda]

I made this mistake some times ago (like many here I guess ). It's totally understandable, I just hate to lose and think I am brighter than other if I change my SL.

In the end, you'll get just get stuck with orders eating all your margin, or even your account. Discipline is mandatory on forex if you really want to earn money. If you don't discipline yourself, then forex turns into some kind of poker room.