Stops

[risktaker]

Hey, if you can trade the ES profitably, stops or no stops, by all means, go ahead and show him then. Don't let me stop you!

The fact remains the majority of people who "trade" these contracts lose over the course of several months and eventually stop. What's the point in encouraging newbies in bleeding their accounts if one doesn't have some profit motive such as the brokers/exchanges/MM's, etc, etc.

Many times what someone *doesn't* tell you is actually quite valuable as it'll make someone think and perhaps come up with a better solution. I'm not here to promote anything nor do I want people competing for the fills in what I trade.

Quote from cnms2:

I see that tortoise has posted only a handful of times, so you don't seem to continue an older argument with him. I can't understand why you decided to post on this tone. You replied dismissively without offering any advice.

He has a problem with stop placing, and asked for advice on it.

I understood that you know what to trade and what not to, but you don't want to share this knowledge. It's your right to do so, but if you don't have anything constructive to add please take your show elsewhere.

 

[cashmoney69]

I guess we're not talking bout stocks, but let me ask you a hopefully obvious question..

whats better, making a 1000 dollars or losing 1000 dollars?

LOL me personally, if i lost 1000 dollars, my account would be wiped out.

 

[tortoise]

Quote from lastOneStanding:

The most experienced trader I know (and trust because I have seen his trading statements for many years) trades the first trade of the day on the ES in lots of 3.
The first lot is exited with a close target, the second lot is exited by however he feels comfortable with that day (trail, target, whatever). The last contract he moves his stop to breakeven and does not touch it until just before the close.
He says on the 3rd contract he gets stopped out of 4 out of 5 trades but the winners are massive as they generally pick up the trend days.
Last

That's interesting. Do you mean to suggest that he only uses a stop on that 3rd contract?

Thanks for the ideas.

 

[tortoise]

Quote from risktaker:

How about this:
Stops are mainly applicable to very trending instruments. Does the ES appear trendy to you? Most futures contracts are by their very nature NOT trending vehicles and chop you to death especially when stops (any kind of stops) are used. But even without stops chances are you'll leave with less dough than you started.

How's that?

Thank you, risktaker. This was my observation as well -- hence my inclination to abandon the use of stops -- and I am grateful for the confirmation.

 

[illiquid]

Quote from tortoise:

On those rare occassions when I was simply flat-silly-on- the-wrong-side-of-everything, I would have exited that trade anyway, usually within a tick or two of the stop.

Thoughts, anyone?

I hope that's an accurate assessment.

Anyways, once you abandon stops, I think the tendency is to become less stringent with timing of entries, so the change may become self-defeating as you are not trading exactly the same as you were had you still believed a stop existed behind every trade you placed. You are retroactively recalculating your results had you not had stops in place; but can you guarantee the same entries after you've consciously revoked them?

 

[volente_00]

What size stops were you using on those stop outs ?
I believe in stops as long as long as they are big enough to let the trade work. I trade ES using a 2 point stop. If I get stopped out I know I picked a bad entry or was just flat out wrong on the direction of the market. Trading is 90 % psychological and when you are in a trade and do not have a physical stop entered then you are only asking for trouble because depending on the market you may not have much time to react to take the loss. A physical stop keeps you out of this situation. I was taught that before entering every trade you must know 3 things, entry, exit and uncle point aka. stop. If you know these 3 then there should not be a problem using a hard stop. As far as using no stops, I tried that when I first started trading YM and is was not very pretty due to emotional decisions which usually turn out to be bad ones. People do not like stops because they think if they get stopped out it means they were wrong, but what those same people have yet to realize that in order to make money in trading you first have to learn how to lose gracefully, and that is what a stop does for you.


"On those rare occassions when I was simply flat-silly-on- the-wrong-side-of-everything, I would have exited that trade anyway, usually within a tick or two of the stop."



Why do you think you would have exited ?

I think on these days you would have gotten the dear in the headlight look and did some serious damage to your account.

 

[madmunny]

instead of answer to your question of wether or not to use stops i have a differetn question for you.......how do you decide when to enter a trade...i understand that you place stops at your pain thresh-hold levels so how and when you decide to use stops is obvious.......but take the S&P e-minis for example, with no leading indicators what do you base your entry points on?

And Tortoise as for your comment that if you hadnt used stops the vast majority of your losing trades would have been winners by the end of the day if your stopout haddnt been triggered.....this is trader suicide because many times you would most probably be 10 ticks offside holding this loser hoping it comes back to take a 1 tick winner, this strategy just is not viable for successful longterm trading....and also your believe that if those times when you are dead wrong from the start and your loser is never going to be a winner and that you would punch out for a reasonable loss soon after your stop out was triggered is most probably you lieing to yourself...the truth is youd be punching out for at least double your loss of where your stop had been if not triple..............you might think youd punch out of that loser but your previous statement that all of your losing trades would turn into winners by then end of the day would cause you to hold all your losers to the point where a monkey would be able to realize that your trade is never going to be a winner.

So please dont stop using your stops cause they are probably the only thing stopping you from losing massive amounts of money instead of the tiny bit that you seem to be losing already.

These are just my humble opinions.....and really...what the hell do i know.....i realized a long time ago im one of those suckers who cant make a dime trading futures so i stick to stocks where i can make a really good livin!........but it cost me many thousands to realize the futures are smarter than me!

 

[Bitstream]

and what are u aiming for with 2 handles stp, 1 full handle?
futs are the worse instrument to trade, I cant get me head around noobers that decide they are the best vehicle: this is a pathetic excuse to avoid the painful job of sorting tickers and studying their trading history and don't give me the crap about undercapitalized accounts...on stocks even with 100shares and three trades a week u have a better chance to be profitable in the long run, without suffering devastating drawdowns. hard to take in the advice given previously? if u listen u might avoid going boom consecutive times before realizing there's much better stuff out there.

 

[tortoise]

Quote from illiquid:

I hope that's an accurate assessment.

Anyways, once you abandon stops, I think the tendency is to become less stringent with timing of entries, so the change may become self-defeating as you are not trading exactly the same as you were had you still believed a stop existed behind every trade you placed. You are retroactively recalculating your results had you not had stops in place; but can you guarantee the same entries after you've consciously revoked them?

Very interesting. As you imply, this does come down to psychology. For example, I did find myself becoming less stringent on entries when I toyed with "scaling in." I find that the all-in approach forces me to "really mean it" when I enter a position. But I wonder whether I abuse the "comfort" of a stop to be a wee bit more aggressive -- or perhaps the word is "lax" -- on my entries.

 

[volente_00]

Quote from Bitstream:

and what are u aiming for with 2 handles stp, 1 full handle?
futs are the worse instrument to trade, I cant get me head around noobers that decide they are the best vehicle: this is a pathetic excuse to avoid the painful job of sorting tickers and studying their trading history and don't give me the crap about undercapitalized accounts...on stocks even with 100shares and three trades a week u have a better chance to be profitable in the long run, without suffering devastating drawdowns. hard to take in the advice given previously? if u listen u might avoid going boom consecutive times before realizing there's much better stuff out there.

My goal is 2 pts using a 2 pt stop.

The only difference between futures and stocks is the amount of discipline you must have. Unless you use huge leverage from a prop firm in stocks or have access to at least 100k and use 4x leverage retail intraday you will not trade for living in stocks. Say you can average 20% on stocks, how much capital will you need to make 6 figures ? Take 100 noobs trying to trade for a living with 10k in stocks and after a year you will have 0 left trading. Take 100 noobs trying to trade ES with 10k and I bet there will be between 1-5 surviving after a year.