I agree with exiting according to what the market does, but what about placing stops based on past trades drawdown? That is, suppose I see that lately, when I enter a trade, it rarely goes against me more than 15-20 pips, should I put a stop at that distance from my entry point? Has anyone tried that and knows it's a good/bad idea?
Hi pfranz The common wisdom is not to trade without stops. It is right. It is wise. This is now going to sound like some contradiction >>> Trading without stops is another wisdom. It is right. It is wise too. Just that it is not going to be a common wisdom. The reasons have been set out earlier in this thread, credit to peilthetraveler and AyeYo. It boils down to the trader having already got entries and exits in his particular trading timeframe (including trade reversal points) fully cut and dried in dynamic chart values and/or price action values even though they are not carved in stone in fixed number values e.g. 1.4950 in the EURUSD that can be keyed in as stops. My take is that if anyone reading this thread does not share similar mental process regarding trade management as run by the two of them, he is definitely better off trading with stops at whatever values that he feels comfortable with. Just an example: http://www.elitetrader.com/vb/showthread.php?s=&threadid=183270&perpage=6&pagenumber=10 With full respect to peilthetraveler (cos I cannot go fully in to get into his mind ), if someone thinks he was talking about luck as in throwing some dice, and not that he was in luck because he wasn't in the loo at the time , then it is better to trade with a stop. Peilthetraveler knows the direction he wants to trade and if he was in the other direction at the time, he'd know when to reverse direction to get it in his favour, i.e., if he was in time to reverse the trade cos he wasn't in the loo at the time ..... and here I am, talking like it is possible to get into his mind when it's not possible, but then, this is an oddball talking haha.
Bottom line is they both use a risk-limiting strategy of one sort or another, to trade without one would be financial suicide, period.
Where is this guy? He blow out yet? I noticed his post about shorting gold too. What a nucklehead. Where's Makloda when you need him. That guy will fire some unfriendly (but great) advice in his direction.