The absurdity of a stop loss - page 12
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If we know that a stop beyond the nearest extremum is going to be taken down, wouldn't it be better to put a pullback pending
like this
Probably close to the truth. I remember that getch wrote once that he gets the best trading results using limit orders. To be more precise, one should calculate the true and false breakouts of an extremum on the history and define the frequency of those.
It depends on greed.
If you take 10 pips, they are almost all true.
Stops should only be placed one way, and one way only:
When playing with big leverage on someone else's money.
In this case, stop-losses are part of the risk management strategy, absolutely necessary to explain to the investor where they are investing and how to protect their funds from severe drawdowns. Slowly losing an account while playing with stop-losses allows you to stretch the process, analyze mistakes, even change the trader's hand while there is still something to trade.
No sane client is likely to give his money to a trader who has no trading system or who does not know how to use it. Even an intuitive trader must explain to the investor the mechanism of decision-making and other key features of asset management, this is called an "investment declaration", and is usually drawn up on paper, but in any case must be discussed by the parties. Without the investment declaration, the trader is exposed to the investor in the event of an unfavourable management result.
Without stop-losses, a fast strong market movement can take out an account in one or two moves on some extreme fundamental like the tsunami in Japan + the S&P's desire to downgrade the US credit rating.
Another way to limit risk is to take lower leverage. But that also means limiting profits. Also a method of risk management. With the leverage of about 1:2 almost any risk can be held without a stop-loss, for example in 2008 the stock market fell by 30-70%, the event is rare and dramatic, but with a small leverage it is quite normally survivable, the investor's account will recover in about a year, but earlier it is possible to increase occasionally long positions on the clear and powerful moves up, sensibly exiting the market when such movements subside. You can see that leverage above 1:3 in 2008 would very likely have resulted in a total account closure without stop-losses.
Stop-loss hunting is also not uncommon, both globally and locally at your broker. Knowing the flow of quotes, it is difficult for the broker to resist and not automate the process of catching a stop-loss when the market is moving successfully, jumping in for a stop-loss by 10-30 pips per quote flow. So compare your broker's quote flow with others, and look for those with such outliers less frequently and by a smaller amount.
You play with big shoulders on other people's money.
another misconception that big shoulders are to blame)
another misconception that big shoulders are to blame.)
If we know that a stop beyond the nearest extremum is going to be taken down, wouldn't it be better to put a pending order there for a pullback
like this
That's a great idea, where would the stop go? )))) it might not be a pullback )) but a trend change
Great idea, where is the stop? )))) it may not be a pullback )) but a trend change
instead of a stop a bot on profit or pips closing, or averaging is reasonable
ZS: in general, hide stops
If you want to trade on profit or pips instead of stop, you should use bot, or reasonable averaging.
ZS: in general, hide stops
I've been thinking about this topic and imagined a car without brakes.
You have to admit, it's very "uncomfortable" to drive without a brake pedal.
Alexander, you seem to be right.
You need a braking system, and a stop loss is a kind of "crash test", i.e. with your forehead and into the wall with all your might.
...You have to admit, it's very "uncomfortable" to drive without a brake pedal...
If you hit the brakes indiscriminately, no good can come of it either.
A stop must be justified.
If you hit the brakes indiscriminately, no good can come of it either.
a stop must be justified.
I am sure that everyone here would be very grateful if you could intelligibly explain how to make a Stop Loss "reasonable".
Don't rush into an answer. We are prepared to wait a long time.