What do you prefer for a scalper?
hello,
In my humble opinion, most people get discouraged when they see large losses that can outweigh several winning trades profit...
- Large and rare stop losses
- Small but more frequent stop losses
It depends what you mean by ''rare'' and ''frequent''. I think it should be decided by the developer which is the best strategy.
People will complain whatever the case most probably. Large stop losses I think psychologically are always the worst because it feels that you are losing a big part of what you gained. Just my opinion.
- Large and rare stop losses0% (0)
- Small but more frequent stop losses100% (8)
I voted "Small but more frequent stop losses" because this makes it easier and quicker to reason about current profitability (or lack thereof) and allows to use larger trades and thus achieve higher growth. This is assuming smaller stops are practical for a given strategy while maintaining at least similar recovery factor, which isn't always the case - so I recognize some strategies have to use larger stops.
When a large and rare stop loss is triggered, you never know whether this is normal or maybe it indicates the strategy no longer works in the current market and needs to be adapted or stopped. Worse, while a priori probability of two or more rare stop losses triggering in short succession is very low, after one has triggered the probability of a second one triggering before the loss is recovered is not that low anymore. So even after two or three in a row, you still don't know. This also means very real risk of even greater loss, which may have to be managed by using smaller trades - either after the first loss or two (which would slow down recovery) or from the very beginning to account for this possibility (which would slow down all growth).
The answer is "Small but frequent stop losses."
I have to agree, and to an even further extent.
Being "married" to a large stop for an extended period of time simply is not scalping─per the Topic title.
I voted "Small but more frequent stop losses" because this makes it easier and quicker to reason about current profitability (or lack thereof) and allows to use larger trades and thus achieve higher growth. This is assuming smaller stops are practical for a given strategy while maintaining at least similar recovery factor, which isn't always the case - so I recognize some strategies have to use larger stops.
When a large and rare stop loss is triggered, you never know whether this is normal or maybe it indicates the strategy no longer works in the current market and needs to be adapted or stopped. Worse, while a priori probability of two or more rare stop losses triggering in short succession is very low, after one has triggered the probability of a second one triggering before the loss is recovered is not that low anymore. So even after two or three in a row, you still don't know. This also means very real risk of even greater loss, which may have to be managed by using smaller trades - either after the first loss or two (which would slow down recovery) or from the very beginning to account for this possibility (which would slow down all growth).
I think that the more time you spend trading, the more safety becomes a priority — even for scalpers.
To me, this feels more like a journey. At first, 1:100 risk-reward ratios fascinated me, but after realizing how unrealistic and mentally exhausting they can be, I gradually gravitated toward wider and less frequent stop losses.
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