The hard learned Stop Loss lesson

[Rossini]

Yes, so why would you continue entering trades with such a wide stop that it can swing around for that length of time before you are convinced you are wrong? Do you actually think you are being logical?

The whole point of a timed stop based on my example is- if there is very low volatility and you don’t get taken out (even if your fixed/mental stop is very close) you are made to exit using a different MM rule. Simple really.

I just cant imagine someone choosing trading as a profession with such extraordinary narrow mind.

 

[cpngtw]

The whole point of a timed stop based on my example is- if there is very low volatility and you don’t get taken out (even if your fixed/mental stop is very close) you are made to exit using a different MM rule. Simple really.

I just cant imagine someone choosing trading as a profession with such extraordinary narrow mind.

Lucky for him that he still has a mind at all

 

[trader_dante]

Today I have to say Ive learned my lesson on stop loss.They warned me on here
to use them ,everyone uses them.I have been trading for 6 months now and never
used them .Didnt know about stop loss until a few days ago when i joined here.
I thought i would have the discipline to get out when i needed to.

But emotions got the best of me.I had to get back to even no matter what as i watched my money drain more and more .

Wouldn't accept a 600 loss no way,then it was 1500 nope gotta hold it will drop just watch any minute now -itl come back,ul see.By close yesterday i was under 2,500.So I thought ok hold and itl drop in morning.Stock opened 2.00 up higher,I still held it!
Stubborn stubborn stubborn!!!!
I said it will drop by 10:15 when market reverses.It went up another 1.00 finally I got out.Couldn't take the pain anymore.In one day from yesterday til today lost near $8,000.That's alot considering I had only 10k profit from trading at this point.
Guess ill start over this time I will use a stoploss and let the broker get me out
automaticly so there's no emotion.Guess i didnt have the discipline I thought I had.
They told me on here ur gunna blow ur account stop now.When they told me that I planned on a stoploss of .50 that i would do myself I never did hit that BUY TO COVER button.
Don't know If You guys post ur bad trades or major losses buy anyway
Learned my lesson hopefully.Maybe its not too late.Still have 2,000 left for now.
Tradings my only hope of quiting my job and having freedom.Now I feel so desperate.

You think that made you sick. Wait till you come back in a week and found that despite losing 8k of your hard earned money, you covered at the extreme of the move, it's reversed and gone back where you originally thought to either a point where you would have actually made decent money or lost next to nothing.

This usually happens since those that cover "when the pain is at its most" do so when the move has already been trending (against them) and then starts to pick up serious moment and volatility leading to a "blow off" top or bottom and a reversal.

Obviously this is not the case all the time. But it is a phenomenon I have witnessed many, many times.

Anyway, you just learnt a very useful lesson and as the great Livermore once said, you can't always fix the cost of that lesson with the marketplace. You paid quite a bit for the lesson but the more pain, the more it will hopefully stick in your memory.

Anyway, many traders have been there and done that. Infact, many traders have been there, done that and still continue to keep doing it.

One thing that will almost certainly make you feel better is to get a copy of Stock Market Wizards (not Market Wizards) and read the interview with Mark Cook. You will feel much, much better. I, 100% guarantee this.

 

[trader_dante]

Mate you are an idiot. By looking at past trades and the length of time it took for them to be sucessful or not, one can easily determine when (if nothing has happened) the odds of a win are getting smaller. Eventually the odds will be so small its not worth staying in the position.

As Mark Cook said in Stock Market Wizards, for him personally: "The best trades work the quickest. I found that you should make three points within the first 10 minutes. After ten minutes, the trade could still work, but the odds are much lower. Once you get to fifteen minutes, the odds are so reduced that all you want to do is get out the best you can. The more time that goes by, the lower the probability that the objective will be reached."

 

[Windowsill]

As Mark Cook said in Stock Market Wizards, for him personally: "The best trades work the quickest. I found that you should make three points within the first 10 minutes. After ten minutes, the trade could still work, but the odds are much lower. Once you get to fifteen minutes, the odds are so reduced that all you want to do is get out the best you can. The more time that goes by, the lower the probability that the objective will be reached."

I get pretty annoyed if it is not within the 1st 10 seconds.:cheesy:

 

[trader_dante]

I get pretty annoyed if it is not within the 1st 10 seconds.:cheesy:

My profits usually take a good few hours to come in

I wouldn't have it any other way.

 

[superfly]

As Mark Cook said in Stock Market Wizards, for him personally: "The best trades work the quickest. I found that you should make three points within the first 10 minutes. After ten minutes, the trade could still work, but the odds are much lower. Once you get to fifteen minutes, the odds are so reduced that all you want to do is get out the best you can. The more time that goes by, the lower the probability that the objective will be reached."

Mark Cook: Market Wizards Video | Online Trading Mastermind | Stuart McPhee & David Jenyns

 

[Splitlink]

Mark Cook: Market Wizards Video | Online Trading Mastermind | Stuart McPhee & David Jenyns

My attitude is much the same. Some points must come in fairly quickly or I get fed up with the trade. Once I can lock a small profit in, though, I am more patient with the end result.

One's character helps, or hinders, trading to a large extent. A price that does not move tells me that there is a total lack of interest in it and, therefore, my entry was probably a mistake because I expected the thing to start moving my way-- naturally! The more I wait, the greater my unease that the trade will go against me. I must get out, then.

 

[new_trader]

My profits usually take a good few hours to come in

I wouldn't have it any other way.

That's because you don't know any other way!

 

[new_trader]

My attitude is much the same. Some points must come in fairly quickly or I get fed up with the trade. Once I can lock a small profit in, though, I am more patient with the end result.

One's character helps, or hinders, trading to a large extent. A price that does not move tells me that there is a total lack of interest in it and, therefore, my entry was probably a mistake because I expected the thing to start moving my way-- naturally! The more I wait, the greater my unease that the trade will go against me. I must get out, then.

Split, it isn't a case of being 'fed up' with a trade. If you are trading intelligently the waiting is done before entering a trade. This way you are near certain that the market will move in your favour almost immediately after you enter. If it does not, then you have to accept that you misjudged your entry. If you have judged correctly your trade will show a profit right from the start or close enough to it that you won't need to twiddle your thumbs for 30 minutes trying to figure out what you should do next.

 

[Splitlink]

Split, it isn't a case of being 'fed up' with a trade. If you are trading intelligently the waiting is done before entering a trade. This way you are near certain that the market will move in your favour almost immediately after you enter. If it does not, then you have to accept that you misjudged your entry. If you have judged correctly your trade will show a profit right from the start or close enough to it that you won't need to twiddle your thumbs for 30 minutes trying to figure out what you should do next.

You must not take my expressions too literally. As you say, the trade is thought out beforehand but

But Mousie, thou are no thy-lane,
In proving foresight may be vain:
The best laid schemes o' Mice an' Men,
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!

Robert Burns

 

[new_trader]

Was Robert Burns a trader!? :-0

 

[Splitlink]

If he wasn't, he missed his vocation.

 

[Black Swan]

Question to more experienced traders re. stop loss

Over the years have you noticed a patern of sorts in relation to stop losses 'working'? In as much as if it's hit at 25, it would have been hit at 30, or 50 etc...?

I appear to have 'settled' on 25 pip being my stop loss (day trader/working mainly on/off 15 minue charts) although ocassionaly the trade has turned in my favour once its gone out to 30-35 pips.

Just wondering if there's an optimum 'accepted' average point loss, or as a few of you have mentioned on the thread if it doesn't fly immediately you expect to close the trade at a loss and therefore bin that trade within minutes and take a v. small loss, of perhaps 10-15 pips...?

 

[new_trader]

Over the years have you noticed a patern of sorts in relation to stop losses 'working'? In as much as if it's hit at 25, it would have been hit at 30, or 50 etc...?

I appear to have 'settled' on 25 pip being my stop loss (day trader/working mainly on/off 15 minue charts) although ocassionaly the trade has turned in my favour once its gone out to 30-35 pips.

Just wondering if there's an optimum 'accepted' average point loss, or as a few of you have mentioned on the thread if it doesn't fly immediately you expect to close the trade at a loss and therefore bin that trade within minutes and take a v. small loss, of perhaps 10-15 pips...?

I do not close a trade if it doesn't "fly immediately", let me make that clear. I trade with such a close stop and wait patiently for the right time to enter that 99.9% of the time only one of two things usually happen almost immediately. 1) My stop is hit or 2) My trade moves into profit. I cannot see the logic or sense in trading any other way. I do not aim to take small profits and I am not a scalper. Over the years the only pattern I have noticed in relation to my stop losses is that they have become tighter and they are being hit less often. THAT is what practice and experience achieves. Anything else is guessing or gambling which is exactly what the wide stop people promote. Take a guess then "manage the trade".

 

[HaloTrader]

Over the years have you noticed a patern of sorts in relation to stop losses 'working'? In as much as if it's hit at 25, it would have been hit at 30, or 50 etc...?

I appear to have 'settled' on 25 pip being my stop loss (day trader/working mainly on/off 15 minue charts) although ocassionaly the trade has turned in my favour once its gone out to 30-35 pips.

Just wondering if there's an optimum 'accepted' average point loss, or as a few of you have mentioned on the thread if it doesn't fly immediately you expect to close the trade at a loss and therefore bin that trade within minutes and take a v. small loss, of perhaps 10-15 pips...?

I trade 15-minute, 5-minute using 25-pip stop also, i have a 1-pip spread so i take this into consideration on the entry level/ exit level (Spreadbetting)

But i know that others, like my dad, trade DMA futures and have very small spreads so for example he may have a 2 pip stop on the S&P500 only aiming for a 3 pip gain.

Just depends what people have learned to do really Scalpings, swingers, investors... Spreadbettors, DMA - Whatever you do must be taken into an account. For example, like i play a breakout on the FTSE100 and it flies down, i check my account and i've just brokeneven due to the spread. My dad does the same trade and he takes his profit when i reach breakeven lol!

 

[Black Swan]

I do not close a trade if it doesn't "fly immediately", let me make that clear. I trade with such a close stop and wait patiently for the right time to enter that 99.9% of the time only one of two things usually happen almost immediately. 1) My stop is hit or 2) My trade moves into profit. I cannot see the logic or sense in trading any other way. I do not aim to take small profits and I am not a scalper. Over the years the only pattern I have noticed in relation to my stop losses is that they have become tighter and they are being hit less often. THAT is what practice and experience achieves. Anything else is guessing or gambling which is exactly what the wide stop people promote. Take a guess then "manage the trade".

How tight on for example a currency pair?

 

[Black Swan]

I trade 15-minute, 5-minute using 25-pip stop also, i have a 1-pip spread so i take this into consideration on the entry level/ exit level (Spreadbetting)

But i know that others, like my dad, trade DMA futures and have very small spreads so for example he may have a 2 pip stop on the S&P500 only aiming for a 3 pip gain.

Just depends what people have learned to do really Scalpings, swingers, investors... Spreadbettors, DMA - Whatever you do must be taken into an account. For example, like i play a breakout on the FTSE100 and it flies down, i check my account and i've just brokeneven due to the spread. My dad does the same trade and he takes his profit when i reach breakeven lol!

What's your 'typical' win loss ratio? Mine's settling around one loss in four trades, given the typical average profit is 35+ that's why (perhaps bizarre logic) I like the loss to be no more than 25-30 pips. I guess I'm searching for the NT style patience and an improved method to cut losses down, but perhaps I just have to accept that if the spread on cable is perhaps 2-3, stop loss 'costing' the same, then a loss of 25 on one in four trades is an occupational hazard...

 

[HaloTrader]

What's your 'typical' win loss ratio? Mine's settling around one loss in four trades, given the typical average profit is 35+ that's why (perhaps bizarre logic) I like the loss to be no more than 25-30 pips. I guess I'm searching for the NT style patience and an improved method to cut losses down, but perhaps I just have to accept that if the spread on cable is perhaps 2-3, stop loss 'costing' the same, then a loss of 25 on one in four trades is an occupational hazard...

I lose frequently because i only have two options; hit a 1:3 risk reward target or hit the stop loss... Resulting in about 54% winning trades, but a winner is worth 3 and a loser 1.

With 50% chance of success... Every two trades is worth about 2% to my account balance Currently doing on average two trades a day with a £7,500 account. Will be moving DMA soon to take advantage of small spread (So much lesser targets, only a few pips in tight ranges and much closer stops) but will continue my current trading also

 

[trader_dante]

That's because you don't know any other way!

Of course that's not true. I'm well aware of other ways but I choose to trade a way that plays to my strengths, away from my weaknesses and more importantly allows me to lead the kind of life I want to lead.