after much research and direct hands on experience, it is my contention that fixed stop losses set at a loss, before profits are achieved by the trade, makes no sense. i have found that, often, after being stopped out, the trade immediately goes profitable. given the volatile short term nature of, say, the ES--- fixed price stops actually cause more losses than would be experienced without stops. the emphasis on tight losing stops appears to be a creation of the market machine that needs an incredible amount of cash to maintain its own infrastructure and gets this fuel one way by fixed price stops.
Stop losses must be placed at logical levels and in function of volatility(you have to place them outside the noise area) No stoplosses ?! till that one time that the market keeps trending against you , then come back and tell me again not to work with stoplosses.
never a good idea to make the assumption that we 'always' make the right choice or decision...stops are no different than entering and exiting a trade, you have to know where and when to place them. -jmho
Spoken like a true noob.... one who has never made any serious money in the markets. Just keep trading without stops and the market will eventually slam you into the ground like a skydiver whose chute failed to open.
Generally speaking, I would have to agree with you. When I started trading the ES in 1998, I lost a lot of money by not using any stops at all. However, I noticed that even that amount was less than what I lost by using 2 pt ($100) stops. Now, when I day and position trade the ES I generally set my stop well away from the current price range. The market truly has to make a determined effort against my positions before it can get to my stop. Needless to say, it is rare for me to be stopped out. Even on losing trades, I am generally able to get out at a much better price than I would have with a fixed stop of 2 to 4 points. Besides, this allows me to go for much larger profit targets as I am not shaken out by every reaction against my entries. Moreover, it has pretty much relieved me from the pressure of having to make perfect entries - which over the years had resulted in my missing many large moves. Happy trading.
No fixed stops but LOGICAL stops so that when the market gets at your stop it has proved that you were wrong and out of the noise zone.