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Thread: Stop Loss Only

  1. #1
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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. #371
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    I does not understand what its means that you are only use the stop loss in our trading. yeah its important for traders to use the stop loss in their trading if they are want to earn the high profit from this market but we are also need a good and reliable trading strategy which help us to get the high profit from this market and help us to get the high earning from this business.

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  3. #372
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    this is very great strategy actually you are saying right that we need a very good trading strategy and i think that very good use of minimum risk management in the forex market using this strategy to earn a money easily and no work hard to make a money in a forex market.

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  4. #373
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    Quote Originally Posted by stable View Post
    I does not understand what its means that you are only use the stop loss in our trading. yeah its important for traders to use the stop loss in their trading if they are want to earn the high profit from this market but we are also need a good and reliable trading strategy which help us to get the high profit from this market and help us to get the high earning from this business.
    As a matter of fact, the explanation is not clear about the trading strategy of the trader. But as for the main topic, he is trying to express that he is using the stop loss as part of the means for him to override much losses, but gain more rewards. But with my understanding on how to use the stop loss and take profits accurately, the trader did not do well about his supposed risk management calculation on this thread.

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  5. #374
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    Trading with low risk is the best thing to do a risky ratio of 1:2 is ok and safe for any type of investment amount forex trading is risky therefore we shouldnt be risking all our capital on a trade also we should set our take profit and stop loss, where ever we make a decision to make use of stop loss we should also consider take profit too because the market is sometimes unpredictable.

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  6. #375
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    Quote Originally Posted by ajagbeolegba View Post
    As a matter of fact, the explanation is not clear about the trading strategy of the trader. But as for the main topic, he is trying to express that he is using the stop loss as part of the means for him to override much losses, but gain more rewards. But with my understanding on how to use the stop loss and take profits accurately, the trader did not do well about his supposed risk management calculation on this thread.
    There are lots of strategies explained clearly in this forum too and we better chose to check ourselves on those strategies. Well using stop loss is very important to manage the risks in trading. But using stop loss is not easy because for that we need to develop our mindset to accept losses too. Profits only come as a reward for our meaningful trading.

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  7. #376
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    Quote Originally Posted by AmitChallenger View Post
    There are lots of strategies explained clearly in this forum too and we better chose to check ourselves on those strategies. Well using stop loss is very important to manage the risks in trading. But using stop loss is not easy because for that we need to develop our mindset to accept losses too. Profits only come as a reward for our meaningful trading.
    That's why I rarely use stop loss because it's not easy to accept any loss. Sometime market can move and hit our stop loss before it reverse, perhaps you don't believe this but it often happen to me in the past. I will let my floating minus as long as I can still accept it and the market still showing me a chance for reversal. But if I think the market will against my open position or if market already give me too big floating minus (maximum 10% )then I will close the position immediately.

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  8. #377
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    You should always place stop loss to secure your trading and protect your trading balance cause without stop loss you could lose more than you invest in the market, make sure that you make use of both stop loss and take profit in your trades cause this really help to minimize the loss, stop loss and take profit are very important tools therefore we should make use of them always.

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  9. #378
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    Quote Originally Posted by Eneregha View Post
    You should always place stop loss to secure your trading and protect your trading balance cause without stop loss you could lose more than you invest in the market, make sure that you make use of both stop loss and take profit in your trades cause this really help to minimize the loss, stop loss and take profit are very important tools therefore we should make use of them always.
    Not just using the stop loss will protect our account, but using it rightly will because if we still land in more losses even by using stop loss than the result is still bad. I am particularly strict with the stop loss, while the take profit, I like to use it in some trades and sometimes not. For the proper usage of stop loss our trading has to be congenial like. if Forex trader want to trade with big lots, then it is difficult to use stop loss properly.

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  10. #379
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    I believe that the use of stop loss is always necessary for all traders to do in as much as you don't want to lose more than you invest in your trade, I really know that stop loss is necessary in forex market because it is not possible for any trader to control or tell the market what to do, so sometimes our analysis fails us, so it is the stop loss that will protect you from losing all your investments in forex market when that happens.

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  11. #380
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    Quote Originally Posted by coolless View Post
    I believe that the use of stop loss is always necessary for all traders to do in as much as you don't want to lose more than you invest in your trade, I really know that stop loss is necessary in forex market because it is not possible for any trader to control or tell the market what to do, so sometimes our analysis fails us, so it is the stop loss that will protect you from losing all your investments in forex market when that happens.
    It is true that the use of stop loss is very good for traders, without stop loss, no protection will be seen in the account of the trader. But the use of stop loss in this thread is not in the normal approach, the trader is trying to use it to achieve a certain goal in his trading strategy. Yet, i do not like it because it is not inline with a proper and well calculated risk management.

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