For buy and hold not day trading but nonetheless relevant:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=968338
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=968338
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Stop Losses are for Losers
- Thread starter chewbacca
- Start date
Useful advice would be to say dont use stops on a Futures position but hedge it with either an option contract or creating a calendar spread using different expiry months - otherwise your advice is as good as saying selling naked options is OK - yeh you make money here there but always at the risk of completely blowing up - naked option sellers are notoriuos for blowing out large accounts big accounts - they in my books are amateurs.
Posts like this keep deteriorating ET.
I don't care who you are, you come here saying or supporting that stops are for losers and you are doing nothing but spreading incorrect management and showing your true colors, regardless of experience.
I think ET should have a rating system next to each new thread so newcomers and others alike could tell right away what's worth reading or skipping.
Problem is, at the end of the day, they will be doing a lot more skipping than reading but then again that's not far from the truth.
Anek
I don't care who you are, you come here saying or supporting that stops are for losers and you are doing nothing but spreading incorrect management and showing your true colors, regardless of experience.
I think ET should have a rating system next to each new thread so newcomers and others alike could tell right away what's worth reading or skipping.
Problem is, at the end of the day, they will be doing a lot more skipping than reading but then again that's not far from the truth.
Anek
If you are referring to my post Im not supporting anything just saying some of these statements need to be qualified.
Quote from Anekdoten:
Posts like this keep deteriorating ET.
I don't care who you are, you come here saying or supporting that stops are for losers and you are doing nothing but spreading incorrect management and showing your true colors, regardless of experience.
I think ET should have a rating system next to each new thread so newcomers and others alike could tell right away what's worth reading or skipping.
Problem is, at the end of the day, they will be doing a lot more skipping than reading but then again that's not far from the truth.
Anek
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
Ouch, I hope all of the agriculture producers out there don't read your assessment of Stops. They use Stops differently than an Intraday trader. To them it is just a tool to protect them either to lock in profits in their longer term speculation trades or locking in profits on their products by countering.
Your assessment of trend is fine but there are still those out there trying to define "Trend". Without the ability to define trend, following it is futile.
chewbacca,Quote from chewbacca:
getting stopped out is basically forced liquidation
now think about it why the f--k would you allow yourself to get liquidated - unless your were fighting the trend, overleveraged, and undiversified from the very start........or you had zero confidence in the position from the start and you just put it on for the action.
Let me guess: You entered a position and either didn't have a stop or you failed to honor a stop. The position continued to go against you. You are now deep in the hole and are sweating bullets. You've found that you can alleviate some anxiety by simply changing your mind about the use of stops, so you say to yourself, "I don't need any stinky, old stops. Stops are for losers, anyway. Those losers allow themselves to be liquidated, but not me, no sir, not me. I piss on stops!"
Well, I have empirically tried different settings for a trailing stop-loss strategy, but the results were not good - at least not as a trading strategy.
It seems that there are no evidence that this strategy produces profitable results. In fact, this strategy has produces worse results than a simple buy-and-hold strategy on average.
There were NO percentage settings that produced better results than a buy-and-hold strategy!
It seems that there are no evidence that this strategy produces profitable results. In fact, this strategy has produces worse results than a simple buy-and-hold strategy on average.
There were NO percentage settings that produced better results than a buy-and-hold strategy!
using stops is completely ILLOGICAL
the only time to BUY is to (1) get long in an uptrend (2) add long as uptrend holds or strenghtends (3) take profits as uptrend or long opportunity completes itself.....and vice versa for SELL decisions
if you're not completely comfortable or confident in a poistion then admit you're wrong and GET OUT NOW......don't hold and hope that the market won't stop you out at the worst price......that kind of trading (using stops) only increases fear and stress........and great trading is about only taking and holding trades when 100% confident or not at all.
using catastrophic stops is okay like for days when you know economic data is coming out or an intermeeting cut is likely.
the only time to BUY is to (1) get long in an uptrend (2) add long as uptrend holds or strenghtends (3) take profits as uptrend or long opportunity completes itself.....and vice versa for SELL decisions
if you're not completely comfortable or confident in a poistion then admit you're wrong and GET OUT NOW......don't hold and hope that the market won't stop you out at the worst price......that kind of trading (using stops) only increases fear and stress........and great trading is about only taking and holding trades when 100% confident or not at all.
using catastrophic stops is okay like for days when you know economic data is coming out or an intermeeting cut is likely.