stops 5226

I apologize if im being too cynical. Trust me its something that has been earned after following countless blogs over the past few years. Basically , how can you enter a trade without a stop ,or perhaps a better way to put it is, how do you know what your risk -reward is when entering a trade? ..best of luck to you Blue!

You can enter a trade without stops if you meet the following three criteria:
a) You have significant funds proportional to your position size.
b) You trade yourself out of the position.
c) You are ****ing insane.

LOL....... by the way Spliton, enjoyed your blog.. congrats!

Thanks I really appreciate it! Believe it or not I think this blog might be the most helpful tool I've added to my trading arsenal yet. It makes me accountable for my dumbass trades. If I am not willing to post an idea on the blog I won't trade it. Definitely is the idiot filter that I was missing.

This could be a very interesting topic. There are some very good traders in this forum, traders who make a lot more money than I ever could, who use no stops at all. As I've expressed many times, I'm for very strict, technically placed stops. I can't even comprehend the concept of not having a stop in place, no less actually doing it. But, as I said, far better traders than I are adamant they wouldn't trade any other way, and that they can't comprehend using a stop. So, I'm looking forward to following this topic.

I strongly agree, Jim! I've been doing this a long time and i've seen situations where in seconds the market plunged due to some unforseen news event.. (911, assasination, etc) ..Heck , even with a stop you can get crushed! I watched friends in 1987 go broke (we were trading the big s&p contract at 500 bucks per point) when the market opened down 40 handles one morning! Thats a loss of 20,000 bucks per contract even with a small stop! And most of us were trading 10 lots!

Another benefit of not using a stop loss on the original position is the hapless trader can (and invariably will) add more size to the losing trade and magnify the overall effect of the original mistake.

I think I qualify for all 3 points below. Personally I got tired of all the "signal patterns" that everyone knows about getting run out . I prefer to work off of zones as most know and the structure that MP provides. You all bring up valid points and having a catastrophic stop in place can help those who don't like the usual 1.5 - 5 point stop range as it seems many use ( just a guess from years of forums and listening to paltalk and vendors).

For me I lose when we trend and that doesn't happen much in the first 90 minutes too often. I agree with the basic tone of this thread and that having some kind of stop is a good thing. I'm not sure we all need to have them wired in when we initiate our trade but we need to specifically know when our analysis is wrong.Then have the common sense to get out.

Like Kool said about the spikes...they will come and burn those of us with and without hard stops. About a year ago when volatility was higher I took a 17 point hit per contract. I had 4 contracts on. It was a spike and I usually remember my most recent spike that burns me. That was the one that burned me good. I was angry at first but realize that this is the cost of my style of trading at times. It will happend again. It is more painful for me on the trend days when I'm fading and trying to peel something off only to fail over and over.Targets don't get hit and I'm slowly bleeding for the day.

I guess I like my punishment and reward quick!!
Lots of great points you folks make here!

Bruce

Originally posted by spliton

You can enter a trade without stops if you meet the following three criteria:
a) You have significant funds proportional to your position size.
b) You trade yourself out of the position.
c) You are ****ing insane.

I think I am going to like this topic. Could kool, or other traders who never would trade without a stop explain why it is so important to use a stop on every trade. I just don't see how traders can place a trade for a particular reason and then place orders and say when it hits this exact price I was wrong.

I also find it strangely odd that at least 2 dozen super traders in market wizards and other books believe in not placing stops but rather areas or zones where they will watch and exit.

Just my 2 cent but limiting losses on a particular trade in no way changes the outcome for the day/week/year/traders life in the market. As bruce stated the markets mostly do not trend on these no trend days I can pick a particular place on a chart where I am sure there are many stops and watch the market run to that area dozens of times a day. One method of this I brought out in the thread "gunning for stops". Where I bet against traders where there is double tops and bottoms. There is many stops in those areas and most traders believe they want be penetrated.

I would say that if trading could be more closely predicted stops would be a good thing. But when you have larger moves in the first hour than 3 hours later its just as insane to place the same size stops...the market changes with every tick and if you have made a predetermined decision 15min ago before placing the trade I think you gonna shoot yourself in the foot more often than save yourself from an account blow up.

If you trade ES open a stock account and trade just 50 measly shares of SPY and trade it the same way you day trade the mini but without stops instead enter when you think the market is going up and exit when you no longer feel that way...don't concentrate as much on exit or even entries but just on sentiment. Do this and you'll never get caught in a account blow up unless you lie to yourself and you can do that with stops.

Originally posted by pt_emini

Another benefit of not using a stop loss on the original position is the hapless trader can (and invariably will) add more size to the losing trade and magnify the overall effect of the original mistake.

pt,

I believe a trader who uses stops can and do add to a loser instead of shooting a dying trade just as a trader who does not use stops. The trader is there own worst enemy not doubling up.

My use of hard stops in the index futures is to avoid getting caught on the wrong side of a genuine breakout and high volume price run against my position driven by the other time frame traders (funds, algo's, bigs, ect...). When they make up their collective mind, they will drive price through the day's range in a linear (straight line) "wave 3" style price move. I have found it is easier for me to simply get out of the way of the big money as quickly as possible when I am caught on the wrong side of their chosen direction.

Absoulutely no offense taken! Your questions are excellant. (in fact i clicked you for it!). I was surprised, not upset! Its just my account is so small (i keep it under 10 large) that an unexpected 5-10 handle hit really hurts! I believe its in discussions like this thread , that the forum sees its finest hours! I learned so much from you (1100.50 sq root plus .382, multiplied by itself=) and Bruce, P.T, and VO THAT HAS MADE ME A BETTER TRADER. Thx.