Trading with a Stop Loss in the Futures Market is for Losers

I’ll stick with the subject and not discuss experience, trading ability and strategy. A couple of others hit that nail very well.

Stop placement can be a cause but I don’t think it is the primary cause of losers in the futures market. Leverage relative to account size is the bush you are beating around. For example, try trading first 100 shares of SPY using $12,700 of cash, instead of trading one ES contract of $63,700, thinking you are only trading the $5000 (the margin requirement).
 
Not only has the "house", as emg puts it, but also raw experience has trained me to use risk management, of which stops are one possibility.

However, there are a number of forms of risk management. For instance, if you have a diversified portfolio, say you have a 100 different stocks, that in itself gives you some risk management where you (probably) don't need to use stop losses.

Or if you are an insider, you know all about your company, you may be quite happy not to use stops.

But for the guy who is trading actively, perhaps using leverage, stops are the most practical tool for him. At the very least, you must have a point in your mind where you will exit, no matter what, if the market goes there.

I recall buying one of the stock index futures literally at the all time high in 2000. I had a stop and was out for 20 pips (or something). It's never gone there since!!! I was also long during the day of the 9/11 attacks. I was out because of my stop loss order just before the big fall.
 
Quote from Visaria:

Not only has the "house", as emg puts it, but also raw experience has trained me to use risk management, of which stops are one possibility.

However, there are a number of forms of risk management. For instance, if you have a diversified portfolio, say you have a 100 different stocks, that in itself gives you some risk management where you (probably) don't need to use stop losses.

Or if you are an insider, you know all about your company, you may be quite happy not to use stops.

But for the guy who is trading actively, perhaps using leverage, stops are the most practical tool for him. At the very least, you must have a point in your mind where you will exit, no matter what, if the market goes there.

I recall buying one of the stock index futures literally at the all time high in 2000. I had a stop and was out for 20 pips (or something). It's never gone there since!!! I was also long during the day of the 9/11 attacks. I was out because of my stop loss order just before the big fall.
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In the house, the sr executives will decide and have a list of high risk traders and low risk traders. They will decide who need stop and who doesn't.

U must be in their black list.
 
Quote from emg:

Those (SMALL TRADERS) that trade with stop in the futures/commodity market are doomed to fail. I am 99.99% sure, u will lose indefinitely.

Think about it small traders, what is the main reason for the loss or blowing your account? Your stop orders.

Of course, small traders need to place stop due to small RISK capital in the account ($5K. $20K, $50K). Small Traders are taught by 3rd party educational and system vendors to place stop to manage risk and yet they represent more than 90% of small trader lose!! They just lose!!

Force trading, overleverage (trading with more cars) with less capital in the account would make sense to place stop and are doomed. 99.99% u will get stopped out.

Adding to average down is risky if one knows how to do it. Most SMALL TRADERS add to average down/up by every tick or point are doomed to fail and will blow their tiny account ($5K, $10K, $20K, 50K) in no time. THEY WILL FAIL!


Solution:

with $100K minimum in the account and begin to trade 1 car and average down/up 15-50pts against u will minimize risk. For example:


short 1325.00 emini sp 500 on 1 car.

es went against you 20pts. your drawdown is $1000 on $100K account. Is that a lot of heat? U are down only 1% of your account. Is that a lot of heat?

U will go ahead and add and your average price will be 3pts away from the market price. From there u take small profit or loss.

$100K account is equal to $5000 minimum standard to open a futures account and begin trading with 1 car


those that do not have that kind of money should either join the house or should not be trading futures market at all

According to the CFTC:

Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.


Remember SMALL TRADERS:

More than 90% of small traders lose. They just lose!!!!


I am looking for the best answers Bring them up!
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I personally don't use actual stops, but do have mental stops. I would never average down, that's very simple.

Regarding your overall post, any post like yours is written by an amatuer. Only a losing beginner can believe that there is any certainty in the market or that there is only 1 way to do things. There are many ways to skin a cat, it's not about only 1 way. And any trader who has any success understands this. I'm sure there are ways to even win while averaging a loss, like you suggested, but i would never do in a million years. I'm 100% sure that there are ways to win using stops, even though I don't use them.

These are the trivialities in trading and have ZERO to do with winning and losing. Winning and losing are about other things, more fundamental things. The Green Bay Packers didn't win the superbowl because they like the color green, they won it because they have the best QB in the league who played at an uber elite level. You're talking about the color green, things of little importance.
 
Quote from plyka:

I'm 100% sure that there are ways to win using stops, even though I don't use them.
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There are ways. 10% winners of the 90% losers.

Only 10% will survive in this game.
 
Quote from Kedwards:

oh shit, emg and jack hershey in one thread
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Thanks for not quoting Hershey... I'm assuming it was one of those mind numbing, brain-stopping posts... he does have a few good points to make as do many, but reading that stuff could make me assume the fetal position..
 
Quote from the1:

You are absolutely correct! I have tested this extensively and over time it doesn't matter where you place your stop because they will cause you to lose. If you place it close you get wrecked by randomness. If you place it far away you will get wrecked by one huge loss that wipes out all previous gains. If you search for a middle road you'll quickly learn there isn't one.
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Bull. You didn't test enough then. Stops don't cause you to lose. Poor entries cause you to lose. If you can't figure out a good place to put a stop then you probably don't know where to enter either. My guess is you probably aren't the most efficient trader if that's the case

What makes you the master on stops lol? They don't have "stop" placement in quant school huh?

There has been a couple excellent threads on here that explain stop placement.
 
Stoploss is for the newbies. Pros dont use stops. Your system either works or it dont. if it dont, get out. U dont need stops to tell you when to get out.

if u need stops at all even a disaster stop, you overleveraged.
 
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