Is stop-loss a myth?
A few questions for you:
- How would you handle longer term trading, where the strategy depends upon positions remaining open for a certain amount of time?
- How would you handle strategies which are not based upon technical/chart analysis - eg. mathematical/probability/chaos based strategies?
- How would you react if your investor client (possibly a hedge fund) required you to control your maximal drawdown within a defined limit?
- How would you manage (and report on) your risk per trade, and risk in general?
CB
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
I am just 8-10 months in this forex field working over the weekends on EA development. At this point I came to conclusion that using stop-loss in EA is just meaningless. I am sure there may have been discussion on this topic before here or some other similar forum and people would have debated on this issue. But I am puzzled sometime when someone looking at EA without stop-loss make comment that it is too risky. I beleive stop-loss is very outdated concept. In fact, in my opinion "static" stop-loss is very counter-productive. In my opinion, your strategy in EA should be such that it should appropriatly generate the trends and signal such that it becomes tolerence to spikes, fast trends. If there is spike it should appropriatly change the current trade depending upon the spike whether it is down ot up and do the same thing with trends those drive the price with faster rate. This way one does not have to worry about sudden change in the price movement and should not have to incur heavy loss or should stop-out. This type of strategy is like having "dynamic stop-loss" built into strategy. Including the stop-loss is mainly for such un-foreseen drastic changes in price. But, if we have static stop-loss we may end up losing the trade with greater loss as there is always retracement in any spike or fast price movement.
Regarding the possiblty of existing any "dynamic stop-loss" strategy - I think there can be such alays available. If one takes a close look at the spike or fast movement they always give some indication that they are going to happen in the form of side-ways moivement or congestion and so on. In a way such movements are not in real sense "un-foreseen" most cases one can obsever carefully for the sign of these event occuring and one can develope such "dynamic stop-loss" strategy for EA.
I would like to hear from experts in this forun about their opion on this stop-loss in general in order to gain more insight into this topic.
-NetFX