stop losses are for loooosers

[FredBloggs]

Quote from primemover:

after much research and direct hands on experience, it is my contention that fixed stop losses set at a loss, before profits are achieved by the trade, makes no sense. i have found that, often, after being stopped out, the trade immediately goes profitable. given the volatile short term nature of, say, the ES--- fixed price stops actually cause more losses than would be experienced without stops.

the emphasis on tight losing stops appears to be a creation of the market machine that needs an incredible amount of cash to maintain its own infrastructure and gets this fuel one way by fixed price stops.

wow.

so you think es is volatile eh!!

all your research shows is that your stops were probably too tight in the first place. - maybe.

try this research and experience on a few different methods before making such generalizations please.

also realise that stops are really as much a psychological protection tool as an equity protection tool. then you realize that stop placement is individual and no one can tell anyone else where to put it, whether to use one or not, etc.

i dont think (in the nicest way) that you have put in the 'experience' that such broad sweeping generalizations require. do you?

 

[gnome]

In spite of the fact that all stops are arbitrary (though some are more logical than others), you can't survive without them.

 

[primemover]

Quote from NickBarings:

No, before you enter the market.

if one is able to predict future price, perhaps.

 

[NickBarings]

Ahh, you don't have to predict the
future to know where the market
proves you wrong.

 

[Lawrence Chan]

Most systems that have "weak" entry signals can be improved by having very wide stop and a pretty fixed target. That's the backtesting results, not in reality.

What happen is that if enough data is tested, or, monte carlo simulation is employed, then you will find that the risk that is taken is so big that it guarantees a crash in the equity some point in the future.

Another characteristics of big/no stop loss is that the average net winning per trade is very small. Always check that when large stop is required for a system to work.

 

[Free Thinker]

Quote from primemover:

after much research and direct hands on experience, it is my contention that fixed stop losses set at a loss, before profits are achieved by the trade, makes no sense. i have found that, often, after being stopped out, the trade immediately goes profitable. given the volatile short term nature of, say, the ES--- fixed price stops actually cause more losses than would be experienced without stops.

the emphasis on tight losing stops appears to be a creation of the market machine that needs an incredible amount of cash to maintain its own infrastructure and gets this fuel one way by fixed price stops.

cramer says the same thing. then gets crushed by falling stocks.

 

[FredBloggs]

Quote from gnome:

In spite of the fact that all stops are arbitrary (though some are more logical than others), you can't survive without them.

shit! you mean i cant hang on to that l;oser for ever - cos i just know it will come back one day! what goes down must come back up right?

hang on - my brokers on the phone - probably another margin call. piker....

 

[chiguy]

Quote from gnome:

Spoken like a true noob.... one who has never made any serious money in the markets. Just keep trading without stops and the market will eventually slam you into the ground like a skydiver whose chute failed to open.

nice metaphor...

 

[ForrestGump]

Quote from gnome:

In spite of the fact that all stops are arbitrary (though some are more logical than others), you can't survive without them.

Yes, stops are absolutely essential to bring you back to reality to reassess the market. Agree that stops are arbitrary. In my experience, the more 'logical' they are, the more likely they are to be hit - possibly because of a large number of people reaching the same 'logical' conclusion.


primemover,

The stoploss point has to be decided BEFORE you enter the trade. You will find that a trader's judgement gets biased by his market position and actually becomes quite worthless once the market starts moving against his position.

 

[Thunderdog]

Quote from gnome:

Spoken like a true noob.... one who has never made any serious money in the markets. Just keep trading without stops and the market will eventually slam you into the ground like a skydiver whose chute failed to open.

Shh! Don't tell him.