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

Just because you are not working an active stop in the marketplace does not mean 'you have no stops'.

Paper trading 'heros' aside; if you are in the live marketplace, you have a loss. It is ultimately determined by your capital and your clearing firm.

The idiot who proposes to trade 1 ES on $100K of course would not require a stop per se. Just don't admit your metrics to anybody... best case scenario sux.
 
IMO, stops are only inapplicable when you trade too large to use them.

So for funds, yes, it's not optimal to use stops due to their size, options would be much more secure and effective risk management model.

But for small size (relatively, assuming trading size, which does not affect the market in the other way, than a butterfly effect) traders, stops are definitely a very simple and effective way to manage their risk.

P. S. Said above has an exception of long option players, who don't need hard stops no matter what size they trade.
 
If you trade for a firm... your stop is determined for you.

You are allocated a specific amount of capital with a specified max drawdown figure.

You will not have a choice in the matter... they will take you out.
 
Quote from bone:


The idiot who proposes to trade 1 ES on $100K of course would not require a stop per se.
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Futures market is built for hedgers and large funds. Futures market was never built for small traders. Neverever. Only idiots with small capital trade futures market and they deserved to lose.

In fact, you are the idiot one selling a losing system to people who do not have the wealth to trade in the highly leverage volatility futures market.

P.S If $100K on 1 ES would not require a stop per se, then that is how one wins the game. And you call that an idiot? I can see why you are in a business of selling because you can't win the game.
 
Quote from cornixforex:

That would be true if the market was random. :)

As for correlations, I already wrote in this thread, that have witnessed myself how very bright quants playing fixed income correlation models, with a lot of institutional experience under the belt got injured very hard in the unusual market conditions of 2008... At the same time, guys with "inferior" risk management aka stops made a certain killing using the huge volatility provided by those markets. :D
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you might be wasting your time and effort here.... most have never placed a long or a short in real time, in their entire lives....

they'll never understand what they do not know.... would they?

those who have 100k would not trade one contract.... this is a fact....; and those that trade one contract do not have the 100k.... that is another fact.

it bemused me the entire last night, since i came across some of the posts here, claiming it is profitable to trade profitably and consistently without having the need for a stop.

good luck to you all without any stop, that is..... LOL
 
Backed traders who don't have stops in when leaving positions open if away from their desks.


Quote from al trader:

who are told to leave the office and not return?
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You clearly don't have a clue what your talking about.

Quote from al trader:

Futures market is built for hedgers and large funds. Futures market was never built for small traders. Neverever. Only idiots with small capital trade futures market and they deserved to lose.
More...
 
Quote from cornixforex:

That would be true if the market was random. :)

As for correlations, I already wrote in this thread, that have witnessed myself how very bright quants playing fixed income correlation models, with a lot of institutional experience under the belt got injured very hard in the unusual market conditions of 2008... At the same time, guys with "inferior" risk management aka stops made a certain killing using the huge volatility provided by those markets. :D
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that's strange. I know quant who made an outsized return in 2008 due to volatility. No stops. at the same time i have met people who simply blew up. They used stops.

Wonder what they did? They traded like Jesse Livermore, fully margined, with stops. Short in 2008. Took out tons of money. Then in 2009 market changed. They died by a thousand cuts. Blew up. Seems like stops don't protect against a blow-up.

One caveat, it's their system that failed, not their stops. But this shows this time again, stops dont protect against risk as you think it does.
 
Quote from failed_trad3r:

that's strange. I know quant who made an outsized return in 2008 due to volatility. No stops. at the same time i have met people who simply blew up. They used stops.

Wonder what they did? They traded like Jesse Livermore, fully margined, with stops. Short in 2008. Took out tons of money. Then in 2009 market changed. They died by a thousand cuts. Blew up. Seems like stops don't protect against a blow-up.

One caveat, it's their system that failed, not their stops. But this shows this time again, stops dont protect against risk as you think it does.
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This leads us to what conclusion? That risk management alone is neither recipe for success nor a failure. :)

A quant trading correlations may win or blow up. An outright trader, who uses stops may blow up too. It's more related to having a good edge provided by your system and skills, risk management is just one of the tools.

But, as I trade a lot of a second kind, I honestly can't imagine how one can blow up having tight stops and good trading signals if risk per trade is sane enough (in the range of 1-2%).

To blow up trading this way one must lose like 100+ times in a row. If someone experiences even 1/4 of such a bad streak and doesn't see something going wrong with his edge that person apparently deserves his trading result. :D
 
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