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  1. #1
    Trader rinaji's Avatar
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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. #511
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    Honestly at a time I think that it is not necessary to have stop loss in the sense that my stop loss got trigger then reverse to be in my favor, which makes me to neglect stop loss in few days of my trade but it has caused me my trading capital, I stop out for the fact that I neglected stop loss in my trade, it is not good for us to neglect or fail to make use of stop loss in our trade.

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  3. #512
    Trader ola4real's Avatar
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    Quote Originally Posted by Toyen View Post
    Forex is a game of probability truly but we can increase the assurance of making income from the forex market when we know how to trade it. Our trading strategy is the number one tool that will make us to trade forex in good way and we will not do that alone. We have to trade with risk management that will make us have good risk to reward ratio.
    No trader can see the certain results with forex and we have to prepare for the losing trades too. That is what makes traders not to trade and lose everything in their forex account. The stop loss is good for us to use, we can not trade and not lose but the stop loss will not let the losing to wipe off all the money we have in our forex account. We can have higher risk to reward when we plan proper money management too.

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  4. #513
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    Quote Originally Posted by ola4real View Post
    No trader can see the certain results with forex and we have to prepare for the losing trades too. That is what makes traders not to trade and lose everything in their forex account. The stop loss is good for us to use, we can not trade and not lose but the stop loss will not let the losing to wipe off all the money we have in our forex account. We can have higher risk to reward when we plan proper money management too.
    Yeah some time we are face losses in our trading account because market is behave some uncertain moves and if you are stop loss in your trading account then you will save your account from these losses but if you are not use stop loss in your trades then you will lose your all money. So its better for us to use a suitable stop loss in our trades.

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  5. #514
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    It is very important to use stop loss in our trades because that's the only way we can survive for as long as we want this business can not be predict correctly at all time some time we might make a wrong analysis without stop loss we could lose all our investment over night that is why it is very necessary that we place stop loss in every trade that we open.

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  6. #515
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    Having stop loss in our trade should not be neglected by traders that thinks of succeeding in forex market, because this is a business that works with profit and loss in it, there is no possibility for us not to encounter loss in our trade, so it is necessary that I should always prepare for the loss whenever it happens in my trade.

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  7. #516
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    Quote Originally Posted by coolless View Post
    Having stop loss in our trade should not be neglected by traders that thinks of succeeding in forex market, because this is a business that works with profit and loss in it, there is no possibility for us not to encounter loss in our trade, so it is necessary that I should always prepare for the loss whenever it happens in my trade.
    No matter what i do in my trading account, i will never make the mistakes of neglecting the stop loss, that will not speak well of any trader. I know that traders can make mistakes at any time, or the market might cause traders to lose even when they don't make mistakes, that is why i know that it will ever be wise for any trader to be trading with the use of stop loss, that is what will guaranty our account safety.

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  8. #517
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    Quote Originally Posted by ajagbeolegba View Post
    No matter what i do in my trading account, i will never make the mistakes of neglecting the stop loss, that will not speak well of any trader. I know that traders can make mistakes at any time, or the market might cause traders to lose even when they don't make mistakes, that is why i know that it will ever be wise for any trader to be trading with the use of stop loss, that is what will guaranty our account safety.
    Honestly it is true that the market can cause us to lose our entire capital in it and it is possible for our mistakes to cause of loss in forex market, but it is not that safe for traders to trade with having stop loss in their trade, I have trade with the mindset that stop loss will get trigger, so in that manner I will trade without having stop loss in my trade but it only leads me to stop out, it is necessary that stop loss should not be neglected.

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  9. #518
    Trader ola4real's Avatar
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    Quote Originally Posted by davido View Post
    As a forex trader you need to consider stop loss to protect you account at all time because this is a business we can't trust 100% loss can occur anytime and without a good stop loss level we could lose all our investment so it is very necessary that we use stop loss to protect our account especially when we take so much trades at a time.
    The traders who will not consider the use of stop loss will not have their account secure, the trader will not know when they will lose all their investment in the forex field too. I have lost my account due to margin call sometimes due to the ignorance of the use of stop loss. At that time that i started using stop loss my trading is better and i make my account alive for more than six month.

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  10. #519
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    Trading forex without stop loss will make the market too risky because it is very possible for you to lose all your investment, so it's not safe at all for us to be trading in the market without stop loss, we need to use stop loss to protect our account that is when we are safe from margin call and stopout so we need to understand how to place stop loss correctly.

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  11. #520
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    Loss is something that we all in this business can't escape from no matter how you are good in forex trade, there is no possibility that the loss will not happen in this market because you are good in the market, it is necessary that we should always have stop loss in our trade but I will not only make use of stop loss only but always apply take profits.

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