Cut Loss in Half Using Wider Stops

[oldtime]

1. I don't like stops but this forex mkt is 24/7 from Sun to Fri and I just can't stay awake that long.

2. I never liked trailing stops because if the mkt moves a little in your favor then pulls back to BE all it has done is tighten your stop. And the reason I put the stop in in the first place was to give myself some wiggle room in case I am not 100% accurate on my entry.

So what I came up with was, using a hard stop and then converting it to a trailing stop.

For example, If my hard stop is 80 pips, and the market moves 80 pips in my favor, I trail at 120 pips.

So I have cut my max loss down by 50% but my stop is now actually wider than it was originally.

 

[FreakofNature]

Sounds like a nice trail stop.

My experence with trail stops is that trail it too tight and they hurt more than they help unless you catch a tremendous trend in your favor.

Thanks for sharing, I do something similar.

How do you feel about scaling out?

FoN

 

[oldtime]

Quote from FreakofNature:

Sounds like a nice trail stop.

My experence with trail stops is that trail it too tight and they hurt more than they help unless you catch a tremendous trend in your favor.

Thanks for sharing, I do something similar.

How do you feel about scaling out?

FoN

I've been through this and read everything and all the stories about great traders who scale in and out and average down. To each his own. Not my cup of tea. I'm all in and all out always.

I trade (just started) a portfolio of FX and that really takes the stress out, which I think is the main reason traders scale. So any one trade is not that big of a deal. I am constantly watching the whole portfolio, and I take a profit, all the winners and all the losers in one fell swoop.

So the only time I am flat is after a big profit. The rest of the time I am constantly spreading and hedging and repositioning.

 

[HATEtheRisk]

Quote from oldtime:

1. I don't like stops but this forex mkt is 24/7 from Sun to Fri and I just can't stay awake that long.

2. I never liked trailing stops because if the mkt moves a little in your favor then pulls back to BE all it has done is tighten your stop. And the reason I put the stop in in the first place was to give myself some wiggle room in case I am not 100% accurate on my entry.

So what I came up with was, using a hard stop and then converting it to a trailing stop.

For example, If my hard stop is 80 pips, and the market moves 80 pips in my favor, I trail at 120 pips.

So I have cut my max loss down by 50% but my stop is now actually wider than it was originally.

Hi dear oldtime,

i think you are on the right way, man.
You begin to think in advanced risk managment terms...
thats very good....

Do it as you ve wrote....thats good...

i manage risk in a similar way......

The question here is: "How much do you wanna allow the price to goes against you, when the price ve already moved this far or this far ??........where will be the pattern/trade broken, and all odds turn against you ???
The answers of this questions are the perfect trade managment, without this you are forced to loose....

I control my risk, depending on the price move - compared to momentum in the move and to timeframe. that means, i only cut down my position and minimize my loss when the odds change and not anymore perfect - so i take out the risk on the whole trade but still have a position on with good odds to make a good risk/win rate trade.............

So control the risk is the KEY.

good luck

 

[SnakeEYE]

Quote from HATEtheRisk:


The question here is: "How much do you wanna allow the price to goes against you, when the price ve already moved this far or this far ??.......

let it go as far is it willing to go.Don`t use stops at all!Stops exist only in trading books.

Cut loss completely using no stops.

 

[HATEtheRisk]

Quote from SnakeEYE:

let it go as far is it willing to go.Don`t use stops at all!Stops exist only in trading books.

Cut loss completely using no stops.

let it go as far is it willing to go. dont use snakeEYE s post at all! SnakeEYE exist only in comedian books. "How to be funny, for idiots"
by snakeEYE.....the master of useless comments........

 

[SnakeEYE]

so far i hit 10 out of 10 trades,25 points on average using no stops.how about you,'hate the trade' crush test driver?

 

[FreakofNature]

Quote from SnakeEYE:

let it go as far is it willing to go.Don`t use stops at all!Stops exist only in trading books.

Cut loss completely using no stops.

Very bad advice, reader alert the above is dangerous.

FoN

 

[HATEtheRisk]

Quote from SnakeEYE:

so far i hit 10 out of 10 trades,25 points on average using no stops.how about you,'hate the trade' crush test driver?

you made trades on saturday ? Which market do you trade ?
the local pig market.......... ???

i hit 20 out of 10 trades all the time, using all the time stops.
how about you, "you funny joke of a trader" ???

I dont think you even know what stop is. you dont even no anything, bcuz you never made one single winning trade in your entire live, thats why youre trolling around here and trying to do your job good, BUT boy, you dont no anything about the trolling business, you are the WORST troll i ve ever seen......

sorry, better try next time......
your local farmer, John Smith

 

[albertly]

Maybe it is not so bad advice.

1. Systems based on chart patterns - need stop loss.
2. Systems based on trend following - may need stop loss
3. Short-term swing system probably - don't need stop loss (in most cases).

One more condition - if you trade without leveraging.

To truly understand if stop loss makes good or harm we need to analyze the MAE and MFE.

For explanation of this idea I would refer you to
Trading Systems and Money Management (Stridsman)
Chapter 17 - Distribution of Trades


P.S. I trade stock (blue chips and ETFs), EOD