Stop-losses

Stops

  • Yay

    Votes: 20 74.1%

  • Nay

    Votes: 7 25.9%
  • Total voters
    27
Quote from Gubinec:

Stop-losses, yay or nay?

Do you believe that stop-losses are necessary in any conditions, or only when conditions call for their use, such as when you need to leave the screen?

This is how a stop-loss works. You buy, you put a stop-loss below the price you bought, when the market drops down to the price where your stop-loss lies, and trades even ONLY ONE contract/share ONLY ONCE at that price, your stop-loss immediately becomes a market order and takes you out (sells at bid, at the moment when your stop-loss price becomes the current market bid-price). Vice-versa for when you sell.

A big guy needs to buy/sell only ONE SHARE/CONTRACT, only ONE TIME, at a certain price, to turn all the stops that are lying at that price into market orders.

What strategies/methods you use to avoid being taken out of the market, right before the market turns in your favor? Do you accept it as a fact of trading life and continue to use stops, perhaps increasing them and thus your risk, or do you avoid using stop-losses except when your attention needs to be away from the screen?
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nay:D
 
ND,

I know you trade CL (I read the thread frequently) and you seem to be looking for 20 ticks now that you are letting you trades run a bit. Given a 20 tick objective can you tell me how much heat you are typically prepared to take?

I don't mean where you might place a catastrophic stop but at what point (even a range would help) you frequently bail if the trade heads against you.

I'm thinking of trading crude but do not yet have a feel for it.


Quote from NoDoji:

Cornix and I trade just about identically, and because of the way we trade, tight stops make sense.

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Bill,

You have this just right. The win rate and your objective might not dictate your stop but it will certainly indicate what can't work.

And you must be ready for that next trade just as you describe.


Quote from intradaybill:

]The startegy is to have a sufficient win rate for your R:R. If you start warrying about price hitting your stop and then reversing you will go crazy. This is what newbies do. Experienced traders know their win rate. They do not care even if the stop is hit exactly and then the market reverses and rallies. They have already a new signal at that point that will make up the loss and a profit on top of that.

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Quote from Swan Noir:

ND,

I know you trade CL (I read the thread frequently) and you seem to be looking for 20 ticks now that you are letting you trades run a bit. Given a 20 tick objective can you tell me how much heat you are typically prepared to take?

I don't mean where you might place a catastrophic stop but at what point (even a range would help) you frequently bail if the trade heads against you.

I'm thinking of trading crude but do not yet have a feel for it.
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My minimum profit target is 20 ticks (if a counter-trend trade or a with-trend breakout trade), but on most trades my target is 30 ticks or more.

My maximum stop loss is 15 ticks, though I recently placed one at 21 ticks when I got into a short position a bit late, but bailed out at a 14-tick loss 5 seconds before a major economic report I somehow overlooked despite the fact that this report has been released every Thursday at the same time for as long as I've been trading. Nice thing about CL is it gives you a very clear "tell" that news is coming in a few seconds and the minute I saw that I said oh shit and whacked the offer :eek:

I don't place catastrophic stops in CL, because I trade intraday off a 5-min chart. I place my stop 1-2 ticks outside an S/R level or a fixed 15-ticks if the S/R level is greater than that. Sometimes I impulsively jump into a trade based on price momentum without looking at a chart, and I just throw in a 15-tick stop when I do that.
 
Perhaps not many people agree with me that stop and target are measurable. I solely use candlestick to trade ES. In my way of projecting price behavior, stop and target are not constant, but directly proportional to the size of ( preceding ) candlestick(s).

The stop and target are true over 90% of the time, unless the 'signal' is faulty as it does not actually herald a repetitive price behavior.

Do your homework.
 
Quote from solotrade:

Perhaps not many people agree with me that stop and target are measurable. I solely use candlestick to trade ES. In my way of projecting price behavior, stop and target are not constant, but directly proportional to the size of ( preceding ) candlestick(s).

The stop and target are true over 90% of the time, unless the 'signal' is faulty as it does not actually herald a repetitive price behavior.

Do your homework.
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Agree with this post.

Stops adjust based on volatility and behavior of the instrument you trade.

Heres a quick way to check. Have your stops in the past worked on the instrument?

This is minimal homework imho before trying to implant the way you work on any market. The market should tell you where to put the stop, not vice versa.
 
Quote from intradaybill:

The startegy is to have a sufficient win rate for your R:R. If you start warrying about price hitting your stop and then reversing you will go crazy. This is what newbies do. Experienced traders know their win rate. They do not care even if the stop is hit exactly and then the market reverses and rallies. They have already a new signal at that point that will make up the loss and a profit on top of that.
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Absolutely agree! If stop-loss is hit exactly (as opposed to slipping badly against you), that is GOOD thing, that is proper trade management. And if it's hit and then comes back and you don't have re-entry signal... So what? No signal, no trade.

Being addicted to single trade outcome is the sign of an undeveloped trader.

Trader should care not about taking good losses, but about being disciplined enough to execute his strategy correctly.
 
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