What happens when it gaps past your stop loss?
Calculating Risk
- Thread starter Etr8r
- Start date
What happens when it gaps past your stop loss?
Nothing much you can do about that other than try to set your stops a small margin (you have to decide this amount) beyond a point at which you would consider your trade to be wrong.
Remember trading is all about preserving capital and staying with winners. That's the reason you need to have good position sizing skills and not put 5% at risk in any trade (like some others on this forum). Everyone must account for times in a trading career that some bit of news or whatever makes a 1R risk become a 5R loss. If you keep position size small enough you will live to fight another day. At 5% at risk in a trade a 5R loss is now 25% of your acct....OUCH!! At 1% risk,..only 5%...still hurts but alot less and definitely more manageable as you only need to gain 5.3% to get back to even whereas in 25% loss you need 33% gain to get back to even.
What happens when a liquidity hole opens up and it gaps way way past the stop?
Or more exactly - how does that risk get quantified and factored into the OP's original question?
First off,...I don't know who you are referring to as "you losers" because I am certainly NOT a losing trader. Second, if you think there is no such thing as risk in these "event driven moves" then you are sadly mistaken. Why dont you give an example of a "no risk" trade so that you can educate all of us "losers"?...as you put it.