Are stops a complete joke ?

Quote from bronks:

Stops are the most ridiculous invention ever created for under-capitalized retail traders.

Hmmmph... undercapitalized and retail... now that's a hilarious fail.

I have given so much to the god of stop that I seriously could've bankrolled a small Nicaraguan army with all the 5-10K accounts I widdled down.
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I guess we need to define "stop" then. Do you never take a loss?

Even if you don't have a stop in the market when you first enter a trade, you must surely have an uncle point that is some $ amount or % of your account, unless you're using the "margin call stop" (...the ultimate stop that EVERYONE is subject to).
 
Yup, unless I had a really good run and have a bit to burn (gamble), I never take directional trades anymore. It took me nine years to learn something Bone has been preaching since I got on this board. But no, just had to learn the hard way.
 
Quote from logic_man:

I read in one book (whoops, I guess that makes me a book reading maestro) that a good rule of thumb is that your INITIAL stop should only get hit on around 10% of your losing trades. The other 90% of your losing trades, you should be able to move your stop in your favor. Seems reasonable to me.
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I'm definitely able to move my initial stops to break even on 90% of my losing trades, but if I moved my stops that quickly, I'd be taken out of most of my winning trades. Moving stops too quickly is worse than using no stops if you're trading a system with high positive expectancy, because you're stopping out of your winners at break even or for less than half the profit the market would give you.

The price you pay for capturing big winners is allowing for the small retraces that give you some heat on the trade. Well over 80% of my trades show profit right away, then retrace into the red at least a little bit. Breakout trades are the exception to that.

The advantage of trading one instrument is getting to know really well the price action odds it presents. I know that 95% of my setups give no more than 14 ticks of heat on profitable trades, which is why I use a max stop of 15 ticks even if a key S/R level is 20 or more ticks away. I call that situation a non-survivable stop, but if the setup is in the direction of the prevailing trend, or has a specific sort of price bar leading into it, I'll often trade it anyway, knowing that if the trade will be profitable a 15 tick stop is very unlikely to be hit, so why risk extra money when you can take a small loss and wait for the next setup?
 
Quote from tomahawk:

I guess we need to define "stop" then. Do you never take a loss?

Even if you don't have a stop in the market when you first enter a trade, you must surely have an uncle point that is some $ amount or % of your account, unless you're using the "margin call stop" (...the ultimate stop that EVERYONE is subject to).
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You're trying to explain the basics of trading to someone who:

1) says he took NINE years to learn to trade
2) is a self admitted disciple of the biggest "educational" fraud on this board

All I'm saying is, don't expect rational responses.

To answer the original question, I have never seen a profitable system that became more profitable (in terms of total ticks captured minus commissions) with the addition of a stop. Not one. But I've seen plenty of profitable systems where the risk profile without a stop was unacceptable and mandated a tiny or zero position size. Many of those could be converted to usable systems with the addition of a protective stop.
 
Quote from NoDoji:

I'm definitely able to move my initial stops to break even on 90% of my losing trades, but if I moved my stops that quickly, I'd be taken out of most of my winning trades. Moving stops too quickly is worse than using no stops if you're trading a system with high positive expectancy, because you're stopping out of your winners at break even or for less than half the profit the market would give you.

The price you pay for capturing big winners is allowing for the small retraces that give you some heat on the trade. Well over 80% of my trades show profit right away, then retrace into the red at least a little bit. Breakout trades are the exception to that.

The advantage of trading one instrument is getting to know really well the price action odds it presents. I know that 95% of my setups give no more than 14 ticks of heat on profitable trades, which is why I use a max stop of 15 ticks even if a key S/R level is 20 or more ticks away. I call that situation a non-survivable stop, but if the setup is in the direction of the prevailing trend, or has a specific sort of price bar leading into it, I'll often trade it anyway, knowing that if the trade will be profitable a 15 tick stop is very unlikely to be hit, so why risk extra money when you can take a small loss and wait for the next setup?
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Another way to deal with getting stopped out prematurely is to have a solid re-entry strategy. That might not be viable for some, depending on the nature of their system, but for anyone who is trading Hourly bars or above, it should be part of their strategy development. You're talking about ticks, so it's probably not a component of your strategy, but I trade Hourly charts, so I can often re-enter a trade to pick up more of the move, when I get stopped of a profitable trade. It depends on whether my getting stopped out really happened because the market was heading into the other direction or not.

"Big winners", or the top 10% of profitable trades, basically make up the entirety of my profits. The other 90% of winning and losing trades sum up to about break-even, so I agree that you have to catch the big winners to be profitable. Those are the "fat tails" of the trade distribution. While I'd love to only take those trades, there are no characteristics to distinguish them from the other 90% of trades before they occur, so I have to take 10 trades to get 1 big winner and if I bail out of a trade just because I take heat from the get go, that doesn't make sense because I could take a lot of heat and then the market goes my way or take no heat and the market goes my way, but there's no correlation between the amount of heat and the ending net profit in my system.
 
It seems to me a "graduated approach" to stops and targets is more reliable for an overall profitable trade set. Ok..so you give up a little profit...or maybe not...

Forming zones of grids on each side of your entry may improve overall probabilities as no one really can predict the single price that will be executed.

Perhaps the trades that you lose on with some or all of the stops being hit..will be offset with a benefit of the target side getting hit with some or all of the profit...Think about it...both sides could get hit and your overall result might beat the single entry and exit...your giving the market a chance to work it out.

Balancing risk with exits is rather compelling if done right.

ES
 
If you know how to enter and especially know how to re-enter you definitely use stops, problem is most traders don't know how to do it because they lack the proper mentoring or years of training required to understand what these magical places in price are. They are not even big stops, quite minuscule too.

A trader that knows how to enter is either right and takes very little heat or gets stopped out because he was wrong.

There is no middle ground people, this works for me with VIX 1 or 100.

My suggestion to you is to keep studying price structure until you find these high probability areas of extreme reaction points.

It's also important to understand that when these areas are found the high probability is in the reaction and not in the outcome. However, once the reaction is obtained, you can eliminate the risk and it's a free trade.

Read these words carefully, most here speak senseless dribble with no value, this is one of those posts you want to save for the future if you still lost in the price bars.
 
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