Market loss is 3x faster than market gain

You can also be a fool trading with stops
Scataphagos said:
IOW... you're a fool if you trade without stops.
More...
- lots of people get stopped out right at the turnaround. And some brokers have been caught in Gold knowing the stops and tripping them deliberately. Guess who loses?
 
Update- I just calculated an average for time in trade from my trading journal. This was for wins, loss, and break even.

Average long 45 minutes. Average short 22 minutes. I was shocked that it was this much different.

I also calculated average result per trade. Remember I only trade ES
Average long 1.2 points profit, 63% win rate
Average age short 1.7 point profit, 78% win rate.

Again, wow! I knew this but wanted the hard numbers.
 
Last edited:
With loss aversion driving the emotional state of most traders and investors it's not exactly surprising to see a long biased instrument display downside "convexity." The reverse would happen in an instrument with a short bias (try finding one besides the VIX) but with panic buying rather than panic selling.
 
misterkel said:
You can also be a fool trading with stops

- lots of people get stopped out right at the turnaround. And some brokers have been caught in Gold knowing the stops and tripping them deliberately. Guess who loses?
More...

Some (many?) advocate trading without stops for your very reason.

Nevertheless... once your stop is hit, you're "wrong for a little". If you let the trade run against you, you risk being "wrong for a lot". That's the one outcome you can mostly control and should never allow to happen.

Managing stops is essential, though subjective.
 
Last edited:
Scataphagos said:
Some (many?) advocate trading without stops for your very reason.

Nevertheless... once your stop is hit, you're "wrong for a little". If you let the trade run against you, you risk being "wrong for a lot". That's the one outcome you can mostly control and should never allow to happen.

Managing stops is essential, though subjective.
More...
Exactly right. When you get caught up in the idea that it always turns around after you are stopped out, then either you entry/timing isn't ideal to begin with, or your stop is just too tight, or you don't know how to re-enter.

Furthermore, people who say they are stopped out all the time could almost use that as a way to build a strategy trading in the opposite direction. The fact of the matter is that nothing ever happens all the time (ie. greater than 75%). But if you do feel like your stop happens regularly enough to warrant not using one, when you cancel it, you will more than likely just end up back at BE if you're lucky, for the best case scenario, and end up losing much more if it keeps going against you.

About the only way to make a strategy profitable that doesn't use stops would be for those trades to turn into big winners in order to cover those times where it goes against you even more. But since this isn't that likely, cancelling the stop will in the long run leads to more losses than the gains from the few trades it saves from being losers.
 
Wow we seem to have gotten way off topic from where I started this thread. But I guess I'll chime in anyway. I would never ever trade without stops. I was foolish enough to do this when I first started. I had "mental" stops. You know what happened. The asset would hit my mental stop and I would not take myself out. Then it just gets out of control and I would lose 25-50% of my account on a few bad trades.

I trade the ES. 2 point hard stop on all trades. I trade 1 CT per $3000 cash in acct. so that's 3% per trade. And I mean that. It's automatically entered into the system with my entry. I use bracket orders exclusively so I also have a hard exit. This is what works for me
 
We remember only the losses, not the gains. So the "3x loss" trades we remember every single time. We do not remember the "3X profit" trades.

Psych 101.
 
You must log in or register to reply here.
Back
Top