not exiting losers on stops

[IN2WIN]

Quote from Gordon Gekko:

one of the things i really do believe is possible (and could make you more money) is to exit bad trades when they don't go how they should, instead of getting out at some far away disaster stop.

I think it is very dangerous to trade without a stop and rely on your ability to "know" when a trade is failing.

It is best if your system has "rules" for determining a failing trade, as mine does. Then the "early exit" is not really early, just part of the system. Many trades look as if they are failing on the way to the profit target.

I would recommend tightening the stop as the trade progresses, again based a set of proven rules.

 

[gms]

OK, these guys, in their statements, certainly own up about using stops or getting out when the trade's not working out. Can anyone correlate their techniques to rule#1? In understandable English?

"Do we sometimes get stopped out of a position only to see the market reverse... Of course, but this is part of the game. We would rather get stopped out than run the risk of ruin by having the position move drastically against us." - Laurence Connors

"Risk Control is the most important thing in trading. If I have a position going against me, I get right out." - Paul Tudor Jones

"I try very hard not to risk more than 1 percent of my portfolio on any single trade." - Bruce Kovnar

"The first rule we live by is never risk more than 1 percent of total equity on any trade." - Larry Hite

"The elements of good trading are: 1. Cutting losses 2. Cutting losses 3. Cutting losses. If you follow these three rules, you may have a chance." - Ed Seykota

 

[EGOT]

Quote from iceman1:

do you..... really............. think trading is THAT complicated... ??!

God I hope not. If it is my success would be an anomaly. The system I use couldn't be much simpler.

 

[jessie]

Using stops religiously absolutely cuts the profitability of my systems (at least on paper). But, I really don't worry about the profitability of my system in those terms. I am much more worried about not losing money. I have found that whether I am on the floor or off, if I manage losses, the profits eventually take care of themselves. As for waiting to get out of a losing trade flat, live in hope, die in despair. There are no trades that are so good that I can't afford to miss them (or can't afford to get out of them too early). If I get stopped out of a great trade too early, there will be another one somewhere in a few minutes, or if I was wrong, I will probably have an opportunity to get back in anyway. I believe it was Baron Rothschild, who when asked how he did as well as he did in the markets, replied that he "always bought too late and sold too early."
Jessie

 

[iceman1]

Quote from EGOT:

God I hope not. If it is my success would be an anomaly. The system I use couldn't be much simpler.

so... I guess I misunderstood your 90+ lines of gibberish...

Pheeeww...

however, if it's THAT simple why can't you explain it in fewer sentences? :eek:

Seriously though bro.... g'luck with this 'easy' and 'simple' biz! Go for it!




Ice

 

[Arnie]

jessie,

All the newbies and struggling traders should print out your comments and tape them above their computer. Well said.

 

[Arnie]

Successful traders always talk about when things began to "click", when the trader began to trade without fear or hope. One of those moments for me is when I realized they were really only a handful of times out of the year/month/week/day where you made most of your money. The rest of the time you just tread water and try not to blow up.

 

[alfonso]

Quote from Gordon Gekko:

one of the things i really do believe is possible (and could make you more money) is to exit bad trades when they don't go how they should, instead of getting out at some far away disaster stop.

My God man, you are a veritable GENIUS! Brilliant!

 

[bubba7]

Quote from gms:

OK, these guys, in their statements, certainly own up about using stops or getting out when the trade's not working out. Can anyone correlate their techniques to rule#1? In understandable English?

"Do we sometimes get stopped out of a position only to see the market reverse... Of course, but this is part of the game. We would rather get stopped out than run the risk of ruin by having the position move drastically against us." - Laurence Connors

"Risk Control is the most important thing in trading. If I have a position going against me, I get right out." - Paul Tudor Jones

"I try very hard not to risk more than 1 percent of my portfolio on any single trade." - Bruce Kovnar

"The first rule we live by is never risk more than 1 percent of total equity on any trade." - Larry Hite

"The elements of good trading are: 1. Cutting losses 2. Cutting losses 3. Cutting losses. If you follow these three rules, you may have a chance." - Ed Seykota

Aways have protection in the form of stops.

No one trades using stops as their preferred exit unless they are using then improperly or their approach is not complete.

One of the common myths here is related to tightening stops. It is ass backwards it turns out. a realted myth on the other side of realizing market potential is the target myth.

KISS comes from depth of knowledge not being simplistic; one comes from knowing you can focus on a few key elemnets; the other comes from not expecting to make much money. The YM is yielding over 250 points so far today, for example, about three observation elements have been involved so far.

 

[gms]

Quote from bubba7:

Aways have protection in the form of stops.

No one trades using stops as their preferred exit unless they are using then improperly or their approach is not complete.

By that you mean no one prefers to have a stop loss executed, I would imagine. Getting out after the trend has changed must involve a bit of profit loss somewhat, no? If so, why wouldn't a trailing stop be as effective as falling price or an indicator telling you to get out?

One of the common myths here is related to tightening stops. It is ass backwards it turns out.

The trade should have tight stops initially to get out if the trade is right away wrong. If it proves neither correct or wrong at first, then widen the stop to an point that makes sense for the trade, such as S/R levels, to permit the trade to maneuver a bit before it takes direction. Is that what you're saying?