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Thread: About Stops

  1. #1
    Super Moderator Gulfstream's Avatar
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    About Stops

    When at the traders’ hangouts a question on stops arises the holy war starts: to set or not to set, and where, and other stuff like that.

    But the biggest mistake in my opinion is that people believe that the stop is a certain element of the MM or Risk Management. Particularly the immature minds are affected from reading books, where they are offered to set the stop at not more than 2% on the previous candle, and other "classical" methods like "cut your losses, let profit run".

    From the position of the quantum, a stop is the same way to go out of position as a take-profit, n-Bar stop, or the default system output. But today we are talking about stops and the MM has nothing to do with it. Yes I agree that the stop affects the risk, but at the stage of the system design, at what risk is an objective reflection of the System Preferences. MM and RM are the completely different stage of System Development Framework, and it is better to leave it until later in order not to stuff our heads with superfluous information, but act consistently.


    Dedicated to fans of short stops

    Some people believe that a short stop proportionally reduces the risk, but it is not so, to set short stops one needs the perfect timing to enter. And when the timing is not easy the market with persistence knocks out all these stops, there appear all the fables of the puppeteers ...

    Stop Loss is set not to exit the market when it goes against the position. It is set in order to go out when the market will drop as a stone, i.e. I think that the stops are not for regular situations. I believe that an acceptable level of output by the stop is 5-10% of the sample, stop is the last hope for the system. In regular situation the system should have the rule(s) on the way out of position, the so-called smart stop when the system determines that the market has changed and it is time to leave. The idea of this post is that the stops should be set far enough from the market, because they are the last line of our defense.


    source_http://ubertrader.livejournal.com/2053.html

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    Last edited by Gulfstream; 02-27-2013 at 05:38 PM.

  2. #1081
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    Quote Originally Posted by SuccessfulKartik View Post
    Forex is not without risk but still it can give big money which can change our life style. .Everything needs money. if you are financially insolvent that nobody will give any importance to you and you can not meet up the primary needs of life either. so to be happy,you need money.
    Yes Forex is a potential business and the fact that it is risky should not bother the skilled traders. Good trading is mostly related to good analysis, risk management and psychological factors. Without controlling the loss a single bad trade can devour our profits of ten good trade. Thus A trader should always use risk control techniques like stop loss, hedging etc. A stop loss should be placed properly to survive minor volatility and fluctuations in the market.

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  3. #1082
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    Quote Originally Posted by PROPENSITY100 View Post
    Yes Forex is a potential business and the fact that it is risky should not bother the skilled traders. Good trading is mostly related to good analysis, risk management and psychological factors. Without controlling the loss a single bad trade can devour our profits of ten good trade. Thus A trader should always use risk control techniques like stop loss, hedging etc. A stop loss should be placed properly to survive minor volatility and fluctuations in the market.
    Yes when we are professional traders, Forex will already be less risky for us. It is really easy to say things than to do it, it may be because most of us imagine that it is just easy to do trades and to earn profits in our trades without being aware and without anticipating negative things while doing it.

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  4. #1083
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    Quote Originally Posted by shivanandfx View Post
    Yes when we are professional traders, Forex will already be less risky for us. It is really easy to say things than to do it, it may be because most of us imagine that it is just easy to do trades and to earn profits in our trades without being aware and without anticipating negative things while doing it.
    Yes we can easily speak big thinks but doing same big thinks is very difficult. Newbies should first learn and this forum is best for them. If new trader write here we can give them solution where is their problem. And we also can help them by advise. But if they want to get any help then they have to come ahead.

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  5. #1084
    Trader Hukam's Avatar
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    Oh yeah mate I would not suggest you to do that by taking more risk of your account because if you will lose your money then at the end your pocket will be empty and you will even not be able to earn some money from this business, so better to enjoy the some amount of money profit it can at least give you some happiness rather than sadness.

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  6. #1085
    Trader lawners1791's Avatar
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    parts with the returns on working with the past terms on moderation possibly had with the chance as trader might wants to displace of the previous terms of beliefs as the excess with the commons on consequence to work with the further sequence on terms with the following terms of plan to gives with the change on relatives as leads to false theoretical outcomes.
    that more with the extent on decision to run of continuous arrange on evaluation with the examination helps on securing the better conclusion.

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  7. #1086
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    Quote Originally Posted by Hukam View Post
    Oh yeah mate I would not suggest you to do that by taking more risk of your account because if you will lose your money then at the end your pocket will be empty and you will even not be able to earn some money from this business, so better to enjoy the some amount of money profit it can at least give you some happiness rather than sadness.
    Yes goals are to be achieved by taking patience and not by taking more risk. Risky trading should be avoided because that is the known cause for giving traders stop outs. In beginning, who are new in this field may lose several times but dont be hopeless . Be more courageous and motivated.

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  8. #1087
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    Leverage allows one to go through with deals involving amounts of money that exceed the amount originally invested. This is an opportunity to gain significant profit with even small changes in exchange rates. The leverage effect, naturally, also works the other way around – in case of loss it increases its amount. However, there is a solution to loss – the Stop-Loss Order. While using Leverage, the profit potential is limitless, but the loss will never exceed the original investment. The best platforms let you set a Stop-Loss Order and automatically close the position once the exchange rate drops below the deposit.

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  9. #1088
    Trader J_C_Anderson's Avatar
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    Stops are important elements of any trading strategy. Depending on particular strategy and trading style traders could use either pending stop-loss orders placed in advance (for intraday trading) or mental stop loss as pre-defined levels where they would close their position manually (a common approach for swing/mid-term trading). Anyway, trader sould have a clear understanding of his further steps in case if the price would move in the unfavourable direction.

    There are many approaches to defining the stop level. Some of the traders (especially newbie ones) use fixed stop size in all their positions. As usual, it is calculated in pips. To my mind, this way to calculate stop size has one important disadvantage - it makes trader to use the same stop in different situations while it would be better to calculate stop size according to current market situation using technical analysis.
    Sometimes traders avoid stops to reduce the number of situations when they would be stopped out just before the substantial movement in favourable direction. In this case, the problem could be in a wrong stop size. To impove this, traders could use special software like Forex Tester allowing them to check the performance of the strategy and try various combination of stop sizes to choose the best one.
    It is also imporant to understand that stop size shoud depend on volatility. If there is an elevated volatility caused by fundamental matters it would e better to increase the stop size while ranging markets offer an opportunity to get the position with smaller stop.

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  10. #1089
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    I agree with those colleagues who claim that fixing the stop level is one of the cornerstones of any trading plan (a particularly important point for beginners and inexperienced traders!).

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