I also don't use stops and I've been much more profitable since I stopped using them. Stops are an absolutely horrible way to exit a position. If your stop is too tight, you probably won't reach your intended target before being stopped out. But if you loosen it, you're probably going to reach your intended target and then give a bunch of it back. To exit I use a limit order. Once the pre-determined profit target is hit, I get out. I don't care if it continues to run. There is always another train coming. In trading, a bird in the hand is worth 10 in the bush. I also don't pick tops/bottoms. I scale in and scale out. Do this correctly and you'll find that your success rate improves dramatically.
I just do it for show. It makes me look like a genious when it works. (I have a personal doctor that's a specialist in hand injuries (he's on retainer, I just pay him by the month.))
Hi ziyan, I had similar problems for a couple of years. Then I started using less tight stops and problem was solved. Good luck!
You might consider taking fewer trades with less sizing and then use wider stops. There is enough "noise" and turbulence in the market where tight stops might not make sense - you are simply not allowing the position to perform as you originally intended. Also, if you are using trailing stops that can be a problem. If your system is good enough, you can get by with wider stops and that is an advantage. All markets consolidate and correct as part of a trend, or they can 'random walk ' as the market searches for a new value area. There is no way on God's Green Green Earth that you are going to put on a position and not take heat on it. Nature of the beast. Hopefully, you have tested and paper traded your system and you are well aware of the max drawdown characteristics in addition to the raw performance metrics. If not, chill out for now and test if your max drawdowns are tolerable for your emotional profile.
stop loss is just for breakout, i.e., key price level. for day trading, all by fingers, stop loss is a nuisnace, a distraction. there is no sense placing a stop loss there or here. if you are swing trading, then you have time to study where stop should be, even in that case, if you are trading stocks, stop loss is totally a non-sense (overnight gaps). I do not use stop loss. first it consumes my time to study where it should be, second it distracts me from my trading, third it does not produce profit and creates loss, fourth it drives you into negative thinking (when I think it will be a loss, I hesistate, my natural hunch ability is forfeited) while forget about what is the most important thing to do: find the trade prints money! never focus on stop loss, focus on what will print money. buy a gap up is pretty wise trading strategy. I bought MDVN at 35 when it was gapped from 14ish to 40+, and rode it to 45 in one week. of course I did not buy the underlying stock, I buy call option. who konws where I should put my stop! if you are in winning position, you should immeadiately notice green. if not, let your instinct tells you: red, ouch, I am out. that is quick and very efficent. your problems are not stop loss, I think you do not understand a trend, or you do not really know how a winning posoition looks like. the market will give you confusing signals. even in an up trend market, there are corrections, those corrections look the same as those drops in a down trend. me too, when I started to trade, I often shoken out by those corrections, late I study those trend chart, I realzied how I read a reversal. that reversal signals really confirmed trend change. it toke time to be able to read reversal signals real time, not after fact. most true trend have at least two to three pushes. normally I can ride three pushes, then no matter what I am out and sit sideline, greed is good, but also is bad, you just need a little bit greed, take you extra miles, that is it, but not great expectation, make a conclusions:I want to stay and make a killing to make my lifetime money, there is, but very few, the odd is like a lottery.
yeah, or you can set up a money management system which allows you to withstand huge losses without being "shaken out." This idea of setting hard stops, whether they are tight or wide will eat you alive. We all get stopped out, but getting stopped out in the context of a sound money management system will get you a lot farther than getting stopped out just because the price moved too far.
================ Za Trend trader; Well, frankly i wouldnt call buying @50 day moving average area a ''falling knife'', but a buy on a ''no earnings ''stock ,can easily result in''no earnings'' especially since you pretty much bought it under 200 dma/tried to catch a falling safe. You may want to study a 11 period ema; especially since it can preserve some profit. Not that a new trader should auto buy under 200 day moving average.As Mr Alan Farley says, ''bears[sellers] live below 200dma''..................... Sorry, but 2.5%/profit % stop on a $11 stock sounds like noise.Wider stops on a buy below 200dma???????-No thanks Nice buy, if it was above 200dma; or if it was SLV or silver, i may/may not buywith discretion below 200dma, but not a no-name no- earnings stock. Remenber 11 dma helper. Wisdom is profitable to direct;hope this helps.
Thanks everyone for the amazingly informative pieces of guidance. I've since tried out many of the suggested techniques, including entering on a stop, and setting a wider threshold for my stop losses. More importantly, I think the hardest thing for me to pick up is to know the difference between fighting the tape and standing against a shakeout. I'm still charting my way through the SZYM trade, having lost a good chunk of profit from the 16.00 level. I have strong doubts about closing out at this point since I see a clear asc. triangle forming... which might turn into a double top tomorrow, given the shitstorm that seems to be coming.. No idea yet. Waiting for confirmation, but from the looks of the broader mkt now... almost definitely a double top lol.. The level 2 reading on this stock has always looked scary, bids are usually 8-15 cents away from each other, sometimes maybe even 25 cents.. red flags? Not sure how indicative level 2 is ..? I'd like to extend my sincere thanks for all the contributors who have shared their insights on this post. I have read every single post and owe you all many thanks for helping me on my way to becoming a better trader. Best of luck to everyone in the upcoming week!