I see stops as buying options: you pay ("lose") money to be insured against risks you can't deal with. It's an art like everything: by doing it randomly you won't get rich like Nassim Taleb, you will just waste your money. I think exiting a losing position (using fixed, time or whatever stops) takes good skills just like choosing a good entry. Actually, if you're good at it you can stop&reverse. When you don't use precise stops you run the risk of having a strategy with very good probability and negative expectation (you win 99.99% of the times, then you blow up), like Niederhoffer had. You who don't use stops, how do you deal with this problem?
There's aways the maximum pain mental stop. It depends on the situation and what the higher time frames look like. I've manually stopped myself out of positions that only went 2-3 pips agaisnt me, and I've held positions that have gone 150 pips against me unti they came back for a gain. You have to ask yourself: was the call actually wrong, or was my timing just off?
Not putting in a doomsday stop is just asking for a widowmaker event to wipe you out. Even if you don't like the idea of tight stops it is just plain stupid not to throw one out there at some level. A 500pip move is lurking around the corner out there ready to eat your lunch. Why be exposed??
Don't leave the computer while in a trade. Set audible price alerts if you're going to be walking around the office/house. Even if there is a 500 pip move in 5 minutes, do you want to get stopped out at -500 pips or would you rather wait and ride up on the nearly inevitable 200-250 pip retrace? So then you say set the stop at -250. Well then the same logic applies, do you really want to get stopped out at the bottom of a 250 loss? Why not ride the rebound? So we go on with that logic, so on and so forth, and before you know it... there's no point in having a stop at all. The bottom line to stopless trading is babysitting. Some people don't like that, so they use stops.
but you must have a 'stop' of sorts, because you lost 132 pips (or was that loss never actually realised??) otherwise, your 'stop' is simply the size of your trading account. well done on a good trading day regards.
It was a realized loss. But I guess you could say its a mental stop, but i definately do not plan it at the beginning of my trade when im going to get out like other people on here do. Just like the other guy, i've had trades that drop 50 or 100 pips and come back. They actually come back more often that not. But yeah sometimes I do get out of trades after 5 or 6 pips going the wrong way too. All depends on the news or what my chart is telling me or just the way the price is moving. (usually i just use my charts in general though)
500 pip move? What in the world will move 500 pips before I catch it? Im only trading the EUR, GBP and JPY. Those do not move 500 pips in a short amount of time. But saying some widowmaker event happens anyway. A 500 pip move will not wipe me out. And a 500 pip move there would have to be some news come out like maybe interest rates get raised 1% from 0% and even if that did happen, im always on during those news type events ready to trade it.
The traders graveyard is full of headstones with the inscriptions "I was waiting for a retracement!" and "This has got to turn around soon!". Sorry to say it but your trading seems to be based more on luck than strategy by the sounds of it. The inevitable will happen one day, and it won't be that retrace you were waiting for!