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Do you use stoploss?

  • #1
  • First Post: Sep 17, 2009 9:49pm Sep 17, 2009 9:49pm
Dear traders, I want to ask you questions about trading:

1. Do you use stoploss or not?
2. Why do you use stoploss and why you don't?
3. How many pips do you use your stoploss?
thanks anyway
  • #2
  • Sep 17, 2009 10:11pm Sep 17, 2009 10:11pm
Quoting ronald_fsm
Dear traders, I want to ask you questions about trading:

1. Do you use stoploss or not?
2. Why do you use stoploss and why you don't?
3. How many pips do you use your stoploss?
thanks anyway

Hi ronald_fsm,

1. Yes, I always use a stop loss.
2. I do because one can never predict what will happen in the world that might move the market strongly against your trade. i.e. terrorist attack, etc.
3. The size of the stop is determined by ones trading plan, it's different for most. (Although many people put them in obvious places and then wonder why they get stopped out and then the market returns to the direction one put their trade in!)

Joey
  • #3
  • Sep 17, 2009 10:28pm Sep 17, 2009 10:28pm
1. In general no.
2. Because my leverage is incredible low and I don't want to exit a trade because of a false breakout/spike
3. -
  • #4
  • Sep 17, 2009 10:31pm Sep 17, 2009 10:31pm
Quoting ronald_fsm
Dear traders, I want to ask you questions about trading:

1. Do you use stoploss or not?
2. Why do you use stoploss and why you don't?
3. How many pips do you use your stoploss?
thanks anyway
1. You always have to use stoploss. Here are few reason:

  1. Power might go out.
  2. Your computer might break
  3. Everyone needs to sleep/rest/eat/...(you might continue this list yourself)
  4. One of the ways to control risk
  5. And so on...and so forth...

2. Why not? What do you gain by not using it? You might survive a market swing. Although, you will survive it anyways if you calculate your risk and stop loss according to you strategies.

3. It all depends on your R/R ratio and trading strategy. As for beginners, it is recommended to start with 1 to 1.5, which means that for every 3 pips you plan to win, you would risk loosing 2 pips. Smaller your R/R ratio more trades you could afford to loose. For example if you trade with 1/2 ratio you need 1 profitable trade to cover to losses. But if you use 1/5 R/R ratio...you will only need 1 trade to cover all 5 losses.

I hope it makes sense.

Good luck.

  • #5
  • Sep 18, 2009 1:02am Sep 18, 2009 1:02am
Quoting solvman
2. Why not? What do you gain by not using it? You might survive a market swing. Although, you will survive it anyways if you calculate your risk and stop loss according to you strategies.
How often do you get stopped out only to see it continuing in your direction? There is no need for stops if you use low leverage.

Quote
3. It all depends on your R/R ratio and trading strategy. As for beginners, it is recommended to start with 1 to 1.5, which means that for every 3 pips you plan to win, you would risk loosing 2 pips. Smaller your R/R ratio more trades you could afford to loose. For example if you trade with 1/2 ratio you need 1 profitable trade to cover to losses. But if you use 1/5 R/R ratio...you will only need 1 trade to cover all 5 losses.

Well, I was never a friend of this R/R bullshit, sorry. It's not that simple. It's a game of probabilities and using a simple 2/1 ratio only means that your chance of getting stopped out is just higher than to reach your tp. At least if we talk about the noisy 5m charts which seems to me one of the reasons why so many newcomers fail (combined with overleveraging)...
  • #6
  • Sep 19, 2009 11:40am Sep 19, 2009 11:40am
Quoting Xaron
1. In general no.
2. Because my leverage is incredible low and I don't want to exit a trade because of a false breakout/spike
3. -
thx xaron for the reply.I have read from books,forum,etc, most of traders use stoploss for their trading,but you seem different from others.
Is it not dangerous not using stoploss?
may i know your leverage use?
I usually use stoploss but most of the time it's hit SL more than TP.

thanks for the answer.
  • #7
  • Sep 19, 2009 12:02pm Sep 19, 2009 12:02pm
Quoting ronald_fsm
thx xaron for the reply.I have read from books,forum,etc, most of traders use stoploss for their trading,but you seem different from others.
Is it not dangerous not using stoploss?
may i know your leverage use?
I usually use stoploss but most of the time it's hit SL more than TP.

thanks for the answer.

If you are a beginning trader it is highly recommended you use a SL to protect your account.

Now if you can prove on DEMO that NOT using one fits your style and still produces profits then by all means knock yourself out, but scale in with real money to test your psych.

Demo is the key here it should be used to test any new system,method, Indicator ect.... before trading a new idea LIVE!
  • #8
  • Sep 19, 2009 7:10pm Sep 19, 2009 7:10pm
Quoting ronald_fsm
thx xaron for the reply.I have read from books,forum,etc, most of traders use stoploss for their trading,but you seem different from others.
Is it not dangerous not using stoploss?
may i know your leverage use?
I usually use stoploss but most of the time it's hit SL more than TP.

thanks for the answer.
Read Xaron post again carefully. Not to demean you nor your IQ, but most people read him the wrong way.

Xaron has a solid reason for not using stop loss, which is not "hoping the price to rebound and reclaim your losses."

I do believe his experience and study (or may be research is a better word) points him that way. And his account (though I don't know it and never have any intention to ask) proves it.

So, in your case, know yourself first and know your system. Than you decide whether to use stop loss or not.
  • #9
  • Sep 21, 2009 4:15am Sep 21, 2009 4:15am
Quoting ronald_fsm
thx xaron for the reply.I have read from books,forum,etc, most of traders use stoploss for their trading,but you seem different from others.
Is it not dangerous not using stoploss?
may i know your leverage use?
I usually use stoploss but most of the time it's hit SL more than TP.

thanks for the answer.
Hi Ronald,

It's dangerous to not use stops if you use high leverage. Personally I use somewhat about 1:1, so if I have a $1,000 account I'd open positions with a size of 1,000 units (0.01 lots). A move of 100 pips would be "only" 1% of the account.

My trading style is indeed completely different to most others here. I don't use stops (well, actually I sometimes use them if I use higher leverage), I add to "losers" and my winner trades are usually smaller than my losing trades. So in terms of those "trading rules" I violate almost every rule one can read here.

If you're more interested in the way of my trading, you can continue here:
http://www.forexfactory.com/showthread.php?t=195287
  • #10
  • Sep 21, 2009 3:02pm Sep 21, 2009 3:02pm
Do you buy insurance ?

There is always a level when enough is enough, otherwise stoplosse will come in a form of margin call.
  • #11
  • Sep 21, 2009 3:46pm Sep 21, 2009 3:46pm
Quoting aiyahmarklah
Do you buy insurance ?

There is always a level when enough is enough, otherwise stoplosse will come in a form of margin call.
Thanks A,
Those are words to live by!
Take note kids, aiyahmarklah is only telling the truth.
  • #12
  • Sep 21, 2009 11:55pm Sep 21, 2009 11:55pm
Quoting aiyahmarklah
Do you buy insurance ?

There is always a level when enough is enough, otherwise stoplosse will come in a form of margin call.
Not using hard stops doesn't mean that I would let losers run forever of course. I thought this is obvious.
  • #13
  • Sep 22, 2009 1:12am Sep 22, 2009 1:12am
[quote=Xaron;3075846]Hi Ronald,

It's dangerous to not use stops if you use high leverage. Personally I use somewhat about 1:1, so if I have a $1,000 account I'd open positions with a size of 1,000 units (0.01 lots). A move of 100 pips would be "only" 1% of the account.

dear Xaron, thanks anyway for your concern to help other traders.
I have a question about that statement. If I use 1:500 leverage why it's more dangerous although I open the same size ( 1000 units)?
I prefer to be scalper using M1 or M5 TF. do you think it's save for newbie to trade this way? thanks for your explanation.
  • #14
  • Sep 22, 2009 1:22am Sep 22, 2009 1:22am
Quoting ronald_fsm
If I use 1:500 leverage why it's more dangerous although I open the same size ( 1000 units)?
It's not, because you have to differ between account leverage and used leverage. It doesn't matter if your broker offers 50:1, 500:1 or even 5000:1. If your account size is $1,000 and you open a trade with 1,000 units, your used leverage is 1:1 (simplified!).

Quote
I prefer to be scalper using M1 or M5 TF. do you think it's save for newbie to trade this way? thanks for your explanation.

What is safe? I think that scalping is one of the most difficult things to do because you just try to beat the noise.
  • #15
  • Sep 22, 2009 2:36am Sep 22, 2009 2:36am
Quoting Xaron
It's not, because you have to differ between account leverage and used leverage. It doesn't matter if your broker offers 50:1, 500:1 or even 5000:1. If your account size is $1,000 and you open a trade with 1,000 units, your used leverage is 1:1 (simplified!).



What is safe? I think that scalping is one of the most difficult things to do because you just try to beat the noise.
thanks for your comment. I already try scalping , and I think it's difficult but I haven't yet try swing/day trade. because I have heard that trader who have little deposit should use scalping better than bigger TF. please CMIIMW. thanks
PS: sorry for bad in english.
  • #16
  • Sep 22, 2009 3:04am Sep 22, 2009 3:04am
Quoting ronald_fsm
thanks for your comment. I already try scalping , and I think it's difficult but I haven't yet try swing/day trade. because I have heard that trader who have little deposit should use scalping better than bigger TF. please CMIIMW. thanks
PS: sorry for bad in english.
No. It doesn't really matter how much money you have in your account. Well at least this is true for Oanda where you can scale down to one single unit.
  • #17
  • Sep 22, 2009 3:14am Sep 22, 2009 3:14am
I agreed with Solvman. I view SL as a safety net. Just like wearing a seatbelt when driving or flying. You don't plan on having accident BUT you never know. Better safe than sorry is always a good philosophy to live by. Want to add this though. I always set SL more than my ACTUAL risk! What I mean by that is our trades are being watch or enter by the broker, so in essence, they can see everything! Therefore, I am not going to EXPOSE my risk. Have you ever enter a SL and notice price tends to hit your SL exactly to the pip and then retrace !!! Why do you think that is the case? Exactly. The broker know where you and most other places SL and will drive price toward them then retrace immediately (this happen on most Fridays). Therefore, say I KNOW my risk is 50 pips for that particular trade, I don't set my SL at 50 or even 60. I set it 150 pips. Why? This is just in case something really horrible happen beyond anyone control (terrorist, war breakout, or computer failure etc). I will watch my chart and close my trade manually at 50 or 60 pips depends on my chart price action at the time. I don't show the broker my hand. Same thing with TP. I set them higher than my actual goal and close it manually.
Ofcourse, if my trade are in positive by 20 or 40 pips, then I will move my SL up to protect BE or lock in 10 or 20 pips. I will then let my trade play out because now the risk is on the house!




Quoting solvman
1. You always have to use stoploss. Here are few reason:

  1. Power might go out.
  2. Your computer might break
  3. Everyone needs to sleep/rest/eat/...(you might continue this list yourself)
  4. One of the ways to control risk
  5. And so on...and so forth...

2. Why not? What do you gain by not using it? You might survive a market swing. Although, you will survive it anyways if you calculate your risk and stop loss according to you strategies.

3. It all depends on your R/R ratio and trading strategy. As for beginners,...

  • #18
  • Sep 22, 2009 7:05am Sep 22, 2009 7:05am
Quoting Xaron
Not using hard stops doesn't mean that I would let losers run forever of course. I thought this is obvious.
Hi Xaron, you are right, I am only refering to stoploss in a general sense. Me too uses a grid style (BWILC) trading on certain pairs and situations.
  • #19
  • Edited Sep 23, 2009 12:58am Sep 22, 2009 12:32pm | Edited Sep 23, 2009 12:58am
I always set SL more than my ACTUAL risk! What I mean by that is our trades are being watch or enter by the broker, so in essence, they can see everything! Therefore, I am not going to EXPOSE my risk. Have you ever enter a SL and notice price tends to hit your SL exactly to the pip and then retrace !!! Why do you think that is the case? Exactly. The broker know where you and most other places SL and will drive price toward them then retrace immediately (this happen on most Fridays).

Dear seapips,
thx for the reply. yes , sometimes the price go to my SL then retrace again. but in my opinion,the broker not just play with me,right?thousand of trader play against the broker, so why the broker only take my SL?
one question again, Is that true that the price of forex can be drive by broker?thz for your explanation.
  • #20
  • Sep 22, 2009 1:42pm Sep 22, 2009 1:42pm
Quoting Xaron
1. In general no.
2. Because my leverage is incredible low and I don't want to exit a trade because of a false breakout/spike
3. -

A friend of mine tells me he hardly ever takes a loss.
He is right more often than not, but when a trade goes against him, he just waits and even if it goes against him a few hundred pips he just hangs in there.

When I look at my own trading, I am also often on the right side of the trade, but sometimes it goes against me and hits my stop loss (45 pips).....but if I had a larger stop it would have eventually come back and gone my way, or at least come back to let me out without a loss

I need to think this through....so i was browsing on FF looking for others who might do this
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