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STOPS are Frustrating (SL) ...to take or not to take
So ive been trading ES for a few years now and i must say, i have truly mixed feelings about taking stops.
ive tried a million angles to work this right and it just never seems to work out right. These are the 3 scenarios i am faced with every single trading day.
1. When you use a tight stop, lets say 8 ticks, the mkt comes back to stop you out by 1 tick and then goes your original way, whether long or short.
2. When you use a wider stops. say 16 ticks, the mkt comes all the way down there to get you for an even bigger loss, in which case, you were better off using the 8 tick stop. (it feels like there is someone looking over my shoulder as i am placing my stops and so they KNOW where i put it so they can come down to get me out)
3. When you use NO stops, the market CRASHES ( May 6 ) or if you are shorting, it will rally 30+ handles and leave you with a HUGE LOSS.
What is a trader to do?? Taking stops is like SLOW DEATH of your account..just delaying the inevitable...and NOT taking stops is like getting wiped out clean in a single day. Both has happened to me. I lost over 10k over the last year using stops, only to see most of those actually go the way i originally planned.
So in Mar and April of this year, i decided on NOT using stops. i would buy lower at incremental levels, like -10 etc. worked great for 2 months, and at the min, got out breakeven on bad days.....Then comes May 6, unsuspecting of what was about to happen, i did what i started doing...then all of a sudden, i found myself long 12 contracts and $17k loss in 10 mins...closed out at the lows, only to find that had i waited a few more mins, i would have had gotten out BE.
anyhow, id appreciate any feedback on STOPS, and how to use them, because it seems that ur doomed if u dont, and ur STILL doomed at a slower rate if u do.
i lost 10k over 12 months and 17k in 12 mins...i have no clue
Stoploss has always been a mystery in trading world since ages. Worked over it for a long time , spent many years in finding a good stop value, tried almost all possible methods to get right stop, and finally ended up no where.
So , as per law of nature , if u can't refine ur stop , better start refining ur entries. Thats what I did. And same i would suggest u to do. When u have good entries , stops automatically becomes scalable enough.
But still a stop is a big mystery for me. I simply use Previous to entry bar low as my stoploss, I know i sound very foolish when i say i do this while using 4 range bars. But again , as i m able to get good entries , stops r unlikely to hit always. Refine ur entries thats what all i can say, We have plenty of good traders here. They will sure guide u ( n also me ) well ahead.
Stops may be a mystery to you but without them you will not remain solvent for long.
I know the success rate of my system.
When I'm stopped out, I'm not upset.
Stops are my protection not my enemy.
I've seen too many traders blow their account by not using stops.
It is like walking a tightrope between two tall buildings without a net.
You may make it across the first time but it is only a matter of time before you slip and fall.
The result is not pretty.
So the answer?
Find a system with a good success rate.
Take trades.
ALWAYS Use stops.
Welcome stop outs as your safety net.
Repeat:
If you are not confident in your trading, trade the simulator until you are.
Rejoice in the Thunderstorms of Life . . .
Knowing it's not about Clouds or Wind. . .
But Learning to Dance in the Rain ! ! !
For starters, there is no one looking for "your" stop. Do "they" run stops from time to time, yes they do. Why? Because they know where all of the stops are and it is just a short term liquidity trade, as they move price to either load up or take profits at better prices.
How do they know where the stops are? Just look at a chart, all of the stops are around the pivots or an even number of points from the pivots. Market profile/Cumulative Delta can also show some interesting levels. So, if everyone knows where they are, how do you fix that? You don't, because it does not matter. Stops are there as protection, to stop you from blowing out an account in 12 min. You always want to live to trade another day.
Can you use big stops to avoid the short term games? Yes, but you still have to have that protective stop somewhere, and it should fit your money management plan, because you should take that stop when it comes. If you have good high probability entries, then this approach can make more sense, but you are really just consolidating all of those smaller losses into an occasional larger loss. Backtesting can tell you if it makes sense, but you also have to decide if psychologically you can actually trade this way, as you can not pull/move that stop as it approaches.
Finally, can you trade with no stop? Yes, it is really just an extension of using a really big stop, but based on your account size and money management you are playing with fire. It only takes one time and you are out of business.
At the end of the day, you need good entries, and a stop that keeps you out of the short term volatility while your trade remains valid and plays out.
Keep it simple. Set a stop based on when you will accept you were flat out wrong about the trade. Make sure that fits your money management/risk plan (generally, no more than 2% of your account at risk). If you are one to just wait for the market to come back before you get out, then there is no hope for you
I agree with this. Your system or method must give you clearly defined entries that are part of a larger overall pattern that you see repeated over and over in the market. Once you see and understand the pattern, you can determine where the entries should be. Once the entries are identified, the natural stop placement should also be apparent.
I struggled the same way you have and I suspect most everyone has but the key is having repeatable entry identification and hence a natural stop that tells you when the trade is over. Example is this: @BigMike has a thread called The elusive price action and how to trade it. He talks about his HH/LL breakout trades. These are repeatable and easily identifiable. But the stops are sometimes very large. Or at least in my opinion, very large. I tried his method of trading on sim. It was easy to find entries. But even on sim, I could not take the large stops. I had to find something else that worked for me.
You will need to find a pattern of price action that works and gives you stops you can handle. Otherwise, you should stop trading until you do.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
I hate stops, i've never been comfortable with it, it is like a mind trap for me. I used them only when the market is very, very slow and i want to be sure to get out. What has help me to manage this is by learning to read a chart with Tradeguider, this way i'm able to better position myself to enter and i am more comfortable to get out when i have to (for a loss), because i base my action on an informed decision. This way i can skip the mind traps (well, most of the time, still needs some practice).
