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Thread: Stop Loss Only

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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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    If you lose, be patient. If you win, stay humble

  2. #1041
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    Every business that have some kind of insurance is bound to last for a longer time and when it comes to forex trading business then the use of the stop loss is an insurance for you to last for a longer term in this market because it would become a means of reducing your losses and help you to make mistakes and learn from them without losing everything in your trading accounts. Personally, I decided that I shall never start trading the forex market without a stop loss because it helps you to remain in control of your accounts and emotions.

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  3. #1042
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    Quote Originally Posted by GEO View Post
    Well sir , this is the new strategy of the trading , i cannot see this type of strategy before. if we want to become a good traders they we use those method which stop the loss . loss will not come when we fully concentrate on the trading and expert in the trading . big traders have some common trick to stop the loss.
    There are many strategies we might not have used before, but the main thing is we know about the strategy and learn to follow it with stop loss. Many people are facing losses because they dont have patience to follow risk management or dont want to use stop loss and all. It is very wrong to have any doubts on the importance of stop loss as some traders have, we should use it with full faith.

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  4. #1043
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    Why should people trade without the take profit and still be comfortable, the stop loss only strategy has way too many disadvantages for me to even take it seriously, have you seen someone that has become highly profitable by using only the stop loss, if they exist, the statistics is very small, use take profit together with stop loss and get the best performance from forex market.

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  5. #1044
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    When we are learning how to trade the forex market it is bound that we would be encountering so much trading mistakes and we become better and profitable forex traders through learning from all these mistakes and they become a stepping stone for a greater development of our trading skills. It is through the use of the stop loss that would make us to last while we are encountering so many mistakes, because if we fail to make use of it then we would lose all the trading accounts even before we start knowing our ways in the field of forex trading business.

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  6. #1045
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    Quote Originally Posted by geddam View Post
    There are many strategies we might not have used before, but the main thing is we know about the strategy and learn to follow it with stop loss. Many people are facing losses because they dont have patience to follow risk management or dont want to use stop loss and all. It is very wrong to have any doubts on the importance of stop loss as some traders have, we should use it with full faith.
    There will be strategies that we have not used in our lifetime, we cannot be using all strategies and so the thing is the strategy we use, we should know that strategy well. In trading profits and losses are two sides of the coin and one cannot be without the other, so we should learn to manage them properly. Demo account is crucial to understand which way of trading can be profitable for traders.

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  7. #1046
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    Having a plan to protect our capital is the best we can do in forex. Proper trading is necessary and with the very best stop loss in forex we will know what we are risking and do make sure we do not risk much more than what we can afford. Stop loss is necessary in forex and with this means of trade we will have the opportunity to build a strong means of earning so as to get better. Good application of stop loss is needed and this is what will therefore help us to manage risk and see we can have the perfect way to indeed earn.

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  8. #1047
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    Quote Originally Posted by mudassor View Post
    Rola, I do not use grid but i am aware with the use of support and resistance level in trade but i do not understand how we will used grid with support and resistance level can you please explain this way in trade this will helping us for mature trading in which less chances of losses and higher for profits .
    Using the grid to place the stop loss in forex field will be a great mistake. The forex traders who are using the grid to do anything are only doing guess work, that is not what I see as appropriate to any forex traders. What I see as appropriate is what you have made mention, forex traders can use their support and resistance strategies to know where best they can place their stop loss and take profits.

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  9. #1048
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    Quote Originally Posted by MIGHTYRAMESH View Post
    There will be strategies that we have not used in our lifetime, we cannot be using all strategies and so the thing is the strategy we use, we should know that strategy well. In trading profits and losses are two sides of the coin and one cannot be without the other, so we should learn to manage them properly. Demo account is crucial to understand which way of trading can be profitable for traders.
    It is not what is right for traders to be trading with all strategies they see in the market, that is not possible. One thing i will likewise want you to know is that, the success of traders is not only in the strategies they are using, the success of traders is in the way they plan their strategies with management and the psychology of trading they are using. The use of stop loss and the trend trading is what i likewise know that is crucial in trader's plan.

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  10. #1049
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    well sir this is really well thread of the trading , i also want to tell all those point which are apply and we stop the loss . i agree with your point and also agree with your charts . about by knowledge loss more then win is not more profitable . we can earn a lot of money by small patient of work.

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  11. #1050
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    Forex market is really a business and most of us are not treating it as such which is the reason why most of them are losing in the field of trading. I believe that there are proper ways through which we can deal with the forex market and become profitable and when we are not following these ways then it is most likely that we are not going to make it here. So one of the things we must make sure of is the use of the stop loss because it is one of the best ways to keep the trading accounts safe from the uncertainties of the forex trading business.

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