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    Stop Loss Only

    Hello all my fellow, this time I want to build a strategy, it is purely on the basis of the inspiration that I got from a content thread created by Value trader. But I forgot which thread is.

    I take an example: we made ​​10 trades, if 9 trades is ending with loss, Are impossible for us to change it into profit? As far as we still have a chance, we can still change the situation into profit. It is depends on our method in managing risk. If we put a stop loss 10 pips/ each trades, and take protit 100 pips. So the end result is, total loss + Total Profit = (9 * -10) + (1 * 100) = 10 pips profit.

    Compare the contrary, for example, we are a scalper, we take profit of 10 pips for each trade, and put a 100 pips stop loss. If we get 9 win trades of 10 transactions. Then the end of the results is: (1*-100) + (9*10) = -10 pips (loss).

    This is evidence that a high level of accuracy in the analysis is not a guarantee for profitable if we can not manage risk properly, in other words, is not able to set the ratio of risk: reward properly. 90% accuracy in analysis isn't mean profitable, and 10% accuracy in analysis isn't mean unprofitable.

    Okay, that is a simple logic of the system that I will build.

    Even so, I will start from zero, I will do a backtest for a few months back, or more than a year back, and then I will do a forward test.
    For a back test, I would not use the analysis at all, I just want to know the worst of this system, I just rely on the game of risk: reward ratio.
    Of course I would compare of 5 methods. So I will know which one is best, and what weaknesses and strengths of this system.


    It is my plan to build this system:
    1. Doing backtest in EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY, USD/CHF, USD/CAD, and EUR/JPY.
    I would compare 5 methods of risk: reward ratio:
    - Stop Loss 25 pips : Take Profit unset. or trade using stop loss only, no take profit. But close all profit positions in the last week or last month.(My system)
    - Stop Loss unset : Take Profit 25 pips. or trade using take profit only, no stop loss, But close all loss positions in the last week or last month.
    - Stop Loss 25 pips : Take Profit 25 pips. or trade with 1:1 Risk Reward ratio
    - Stop Loss 25 pips : Take Profit 50 pips. or trade with 1:2 Risk Reward ratio
    - Stop Loss 50 pips : Take profit 25 pips. or trade with 2:1 RIsk Reward ratio.
    In the back test, I would just use grid trading, (using robots), so I'm not going to use market analysis.
    I use buy stop and sell stop orders, the distance of each order is 25 pips. I do not use order limit, just order stop. And the distance of the nearest pending order to the current price is 25 pips. And will always add new pending order if the price move 25 pips or more.
    Just see the picture...


    2. Doing forward test. Here I will determine the appropriate analysis strategies, and then do some testing, maybe I can change the method of analysis if I am still getting unsatisfactory results. Then If I've got a good and profitable system, then I will make a thread for this system, this is my journey in building strategy. A system with use stop loss only.

    Thank you

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    Well this is a very new strategy, i think i never heard about this strategy rina ji before personally i like to do trade by following market trend this type of trading strategy is very differ from my own analysis and trading strategy i need a lot of practice for this i will try to test this strategy also and hope you will add more screenshots in near future in this thread

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    Rookie rinaji's Avatar
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    Quote Originally Posted by Khimi234 View Post
    Well this is a very new strategy, i think i never heard about this strategy rina ji before personally i like to do trade by following market trend this type of trading strategy is very differ from my own analysis and trading strategy i need a lot of practice for this i will try to test this strategy also and hope you will add more screenshots in near future in this thread
    Okay khimi, I am happy to see you here, this is only part of my experiment. I hope you can help me to monitor me in building a strategy based on my understanding. thak you...

    Now I make a simple backtest of this strategy (without analysis), I use a robot (multilevel stop pending orders). Why I test it without analysis? Because we should always know the worst condition of our strategy, don't only show your best condition of your strategy, it would never give you a chance to evaluate.

    I use $1000 deposit, lot size per trade = 0.01, and stop loss = 25 pips, range per position = 25 pips.
    I take eur/jpy as the sample for backtest, and I take the results once a month (from 2011).

    July 2011
    The condition of market on July 2011 in daily chart.



    Graphs of equity and balance.
    Maximum drawdown of equity is $979.



    The result...


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    I am trying to implement in a real account, after a few days I get a loss and loss again (25 pips stop loss), I finally ended the transaction with profit ($ 17 profit in accumulated). I put sell orders only (sell stop orders).


    The results...


    I got 12 loss orders, all is using fixed stop loss (25 pips), and I don't set take profit, I just take profit manually when it reach the target in $$.
    12 loss orders, 6 win orders. (2:1 loss:win ratio)
    But the result is profit. That's what I mean about this strategy, no matter how many we get loss trades, but we can get profit in the end. Although loss trades is always much more than win trades.

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    Very nice strategy so for now you are using this strategy in real trading account or in demo trading account? But it will be better if your risk and reward ratio will be much better for your trade's I can understand that still you are making profit with this strategy but can we improve your risk and reward ratio in this strategy?

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    This trading system comes with mix feeling by me. I do not think this is a good idea to have the stop loss place for so many trading positions open with no take profits. It will only work if the market is trending so strongly, but if it is a market that goes up for like 40 pips and comes back with the same magnitude, it will be tiring and it will not work.

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    Quote Originally Posted by Khimi234 View Post
    Very nice strategy so for now you are using this strategy in real trading account or in demo trading account? But it will be better if your risk and reward ratio will be much better for your trade's I can understand that still you are making profit with this strategy but can we improve your risk and reward ratio in this strategy?
    Hi khimi, I still do backtest and forward test, there is no target in backtest, because I use EA for back test, and I took samples every month, start at the beginning of the month, and stop in the end of the month. But we can see of the result, how much profit, maximum drawdown and maximum equity, and etc. I will build this strategy from zero.

    Quote Originally Posted by cozard007 View Post
    This trading system comes with mix feeling by me. I do not think this is a good idea to have the stop loss place for so many trading positions open with no take profits. It will only work if the market is trending so strongly, but if it is a market that goes up for like 40 pips and comes back with the same magnitude, it will be tiring and it will not work.
    Dear cozard. Yep, every strategy has its strengths and weaknesses, then we must find a weakness of our strategy. There were no perfect strategy, if the strategy only works in a trending market, I think it does not mean its no good idea, depending on how we control our strategy.
    And I know this strategy will be controversial, since many traders who do not agree with the idea of this strategy. But I must try my own idea for building a strategy. I just focus on the result.

    Even so, I do not hide the results of the backtest and forward test, so we do not need to be concerned about before seeing all the results of the backtest and forward test.
    And it's just my experiment.

    Okay I just want to make it as objective as possible.

    I took the scenario according to the market conditions you mentioned, market goes up 40 pips and comes back..., Here I will take the same conditions as my standart rule of this system. put order stop in each 25 pips. It mean at 00, 25, 50, and 75 of the of the last two decimals.

    Description: Suppose we ignoring the spread
    1. Price start at 1.5000. I put buy stop at 1.5025 (stop loss 25 pips at 1.5000)
    2. price goes up 40 pips to 1.5040. In this level, what the result? I get 15 pips profit, right? I put sell stop at 1.5025 (stop loss 25 pips at 1.5050)
    3. price goes down 40 pips to 1.5000. In his level, what the result? I get loss 25 pips for buy order, and 25 pips profit for sell order. So if we stop trade in this level we get nothing.

    That is if I use 25 pips distance per order. What if I use a 10 pips distance (SL 10 pips)? Let see ...



    Description: suppose we ignoring the spread
    1. Price start at 1.5000. I have 4 buy stop order at 1.5010, 1.5020, 1.5030, 1.5040
    2. Price goes up 40 pips to 1.5040, what is the result at this point?
    Calculation: buy 1 = 30 pips profit.
    buy 2 = 20 pips profit
    buy 3 = 10 pips profit
    buy 4 = 0
    Total = 60 pips profit.
    And then I have 4 sell stop orders...
    3. The price goes down to 1.5000, what the result at this point?
    Calculation: all buy order get loss @ 10 pips = 4*-10 pips = -40 pips loss.
    sell 1 = 30 pips profit
    sell 2 = 20 pips profit
    sell 3 = 10 pips profit
    sell 4 = 0

    Total = 60 profit - 40 loss = 20 PIPS profit. We still have 20 pips profit if we stop transaction at this level.

    It is the result of market conditions you mentioned, it is good to know the worst conditions for our strategy.

    But once again I tell that its only my experiment. And I need you all to watch and give opinion and also advice, thank you for that.

    Okay... I'll continue to backtest...

    The result of July 2011 in EUR/JPY

    Market condition (daily tf)


    Balance and Equity chart..., max drawdown of equity is $981


    the result ( still get profit)

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    To be honest I found this like a gambling attitude than actual trading. You are just living it to chance that the trend will go your way. Its good to trade with certain and its good to trade with your analysis. In this way you can maximize the profitable chances. And minimize the loses. In your strategy you can end up having multiple position if I am correct in understanding your trading strategy and that means if you loss you can have multiple loses. But if you make profit the profit and loses ratio is not good.

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    The result of August 2011

    Daily chart condition



    Max equity reached, and max drawdown.



    Result (loss)



    I take the screenshots of the monthly candle, Because this is unprofit month. So I will know the form of unprofitable candle.




    The Result of September 2011

    Daily chart condition



    Max Equity drawdown



    The result


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    Last edited by rinaji; 10-22-2014 at 07:57 AM. Reason: replace a screenshot
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    Quote Originally Posted by budado View Post
    To be honest I found this like a gambling attitude than actual trading. You are just living it to chance that the trend will go your way. Its good to trade with certain and its good to trade with your analysis. In this way you can maximize the profitable chances. And minimize the loses. In your strategy you can end up having multiple position if I am correct in understanding your trading strategy and that means if you loss you can have multiple loses. But if you make profit the profit and loses ratio is not good.
    Haha, that's right mate...
    Actually I've said before, Let me quote again...

    In the back test, I would just use grid trading, (using robots), so I'm not going to use market analysis.
    I will start from zero, I will do a backtest for a few months back, or more than a year back, and then I will do a forward test.
    For a back test, I would not use the analysis at all, I just want to know the worst of this system, I just rely on the game of risk: reward ratio.


    Doing forward test. Here I will determine the appropriate analysis strategies, and then do some testing, maybe I can change the method of analysis if I am still getting unsatisfactory results. Then If I've got a good and profitable system

    Please read carefully, It is not a thread for strategy, this is the thread for the journal, I am free to do backtest and forward test, free to experiment and doing trial and error.
    As I said previously, I will build a strategy from zero. The first stage is to determine the risk - reward ratio. So I would take samples without analysis. I use a grid robot, without any analysis. The goal is I want to know the profitable calculation for risk - reward ratio in the most adverse conditions. You can see the results of the backtest, I get oss trades several times more than the win trades. But this is a trade, win more than loss is not always mean profitable, and vice versa. Loss more than win is not mean unprofitable . I will always take the evidence in the form of a screenshot.

    And after I get profitable results without analysis (relying only risk - reward) ratio. Then the second task is apply the strategy of analysis.

    Thanks

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