Stop Losses are for Losers

Perry Kaufman agrees with you.

This past weekend I purchased and downloaded a Kaufman interview from TAofS&C

http://traderscom.stores.yahoo.net/-v13-c06-intervw-pdf.html

I'm currently following/studying some of Kaufman's backtesting suggestions from is books.


Quote from chewbacca:

seriously the people that tend to use stop losses are the people that:

- are undiversified; they put all their eggs in one basket hence they want to protect their basket

- over leveraged; to the point where they can incur large losses from the noise of the market

- fight the trend; thus they need "protection"



what you should do:

trade the trend and only buy on long opportunities and only sell to enter short opportunities

diversify

and never bet too large right from the start - give the position some time



now granted every trader has blown up so everytrader mistakenly believes had he used stops he wouldn't have blown up.....but that is wrong because the only way to really blow up isn't by not using stops.........its by fighting the trend + being overleveraged
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Not sure how many of you have actually traded but from my experience as a broker who broked many of the well known guys back in the 90's early 2000's the majority used stop losses to one degree they might not have have hard stops but they always had them. There was one notable exception where he lost over 120 mill short the S&P.

The market is is free agent and cannot be relied upon to do what you expect it to all the time stops simply cushion and protect one from from such randomness.
 
Quote from wareco:

So, I assume that if one were to search your prior posts no mention of you using stops would be found. Is that right?
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no, i used stops in the past. but have learned the truth recently.- position sizing and correct entries are key.

regards, surf
 
Quote from ProfitTakgFool:

My trading improved 1000-fold when I stopped using stops. Now I start very small and if the noise presents greater opportunity I add to it. If the trade isn't going to work it isn't going to work and I self liquidate. Not using stops shouldn't be misinterpreted as not managing risk, however. I manage risk but I take control of it. I don't leave it to the market at some arbitrary number.
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right on PFT. My strategy is to basically "nibble" positions at the beginning. If they confirm, I grab more, but no one positiion is going to kill me. My position sizing is such that if any one of my positions were to go to 0, then that would be equivalent to some other traders highly leveraged stop loss.

Somebody posted a link to Chris "Jesus" Ferguson's strategy of taking 0 to $10,000 by using an ultra-conservative strategy a little bit back. That was eye opening. I essentially do the same thing with trading. You could say that my strategy is a mini-market maker swing to long-term strategy.
 
Quote from chewbacca:

seriously the people that tend to use stop losses are the people that:

- are undiversified; they put all their eggs in one basket hence they want to protect their basket

- over leveraged; to the point where they can incur large losses from the noise of the market

- fight the trend; thus they need "protection"



what you should do:

trade the trend and only buy on long opportunities and only sell to enter short opportunities

diversify

and never bet too large right from the start - give the position some time



now granted every trader has blown up so everytrader mistakenly believes had he used stops he wouldn't have blown up.....but that is wrong because the only way to really blow up isn't by not using stops.........its by fighting the trend + being overleveraged
More...

Hmmm, not a believer in stops eh?

Quote from chewbacca:

here is what i would like:

* Auto stops on all trades.....IB kinda has this feature but its really not auto, you do have to manually enter the 'auto' stop.

* Max position size restriction.

* Restriction against averaging down.

* Automatic liquidation of positions and account locked for the day/week/month once a certain loss level gets hit for the day/week/month.

I think ninjatrader advertises risk management with their platform.......can anyone comment on it..........i also recall buttontrader having such features.........again, does anyone have any experience with it?
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Quote from chewbacca:

and AFTER the trend changed provided plenty of opportunities to get short on the way down
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What took you out of the long bet when this change occurred since you have no stops?

Seeing your consistency thread, i am now convinced this thread must be an attempt at humor.
 
Quote from tradestrong:

right on PFT. My strategy is to basically "nibble" positions at the beginning. If they confirm, I grab more, but no one positiion is going to kill me. My position sizing is such that if any one of my positions were to go to 0, then that would be equivalent to some other traders highly leveraged stop loss.

Somebody posted a link to Chris "Jesus" Ferguson's strategy of taking 0 to $10,000 by using an ultra-conservative strategy a little bit back. That was eye opening. I essentially do the same thing with trading. You could say that my strategy is a mini-market maker swing to long-term strategy.
More...


can you find that link?

thanks!
 
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