stop losses are for loooosers

Discussion in 'Strategy Building' started by primemover, Jun 29, 2005.

  1. FredBloggs

    FredBloggs Guest

    wow.

    so you think es is volatile eh!!

    all your research shows is that your stops were probably too tight in the first place. - maybe.

    try this research and experience on a few different methods before making such generalizations please.

    also realise that stops are really as much a psychological protection tool as an equity protection tool. then you realize that stop placement is individual and no one can tell anyone else where to put it, whether to use one or not, etc.

    i dont think (in the nicest way) that you have put in the 'experience' that such broad sweeping generalizations require. do you?
     
    #11     Jun 29, 2005
  2. gnome

    gnome

    In spite of the fact that all stops are arbitrary (though some are more logical than others), you can't survive without them.
     
    #12     Jun 29, 2005


  3. if one is able to predict future price, perhaps.
     
    #13     Jun 29, 2005
  4. Ahh, you don't have to predict the
    future to know where the market
    proves you wrong.
     
    #14     Jun 29, 2005
  5. Most systems that have "weak" entry signals can be improved by having very wide stop and a pretty fixed target. That's the backtesting results, not in reality.

    What happen is that if enough data is tested, or, monte carlo simulation is employed, then you will find that the risk that is taken is so big that it guarantees a crash in the equity some point in the future.

    Another characteristics of big/no stop loss is that the average net winning per trade is very small. Always check that when large stop is required for a system to work.
     
    #15     Jun 29, 2005
  6. cramer says the same thing. then gets crushed by falling stocks.
     
    #16     Jun 29, 2005
  7. FredBloggs

    FredBloggs Guest

    shit! you mean i cant hang on to that l;oser for ever - cos i just know it will come back one day! what goes down must come back up right?

    hang on - my brokers on the phone - probably another margin call. piker....

    :D
     
    #17     Jun 29, 2005
  8. nice metaphor...:D
     
    #18     Jun 29, 2005
  9. Yes, stops are absolutely essential to bring you back to reality to reassess the market. Agree that stops are arbitrary. In my experience, the more 'logical' they are, the more likely they are to be hit - possibly because of a large number of people reaching the same 'logical' conclusion.


    primemover,

    The stoploss point has to be decided BEFORE you enter the trade. You will find that a trader's judgement gets biased by his market position and actually becomes quite worthless once the market starts moving against his position.
     
    #19     Jun 29, 2005
  10. Shh! Don't tell him.
     
    #20     Jun 29, 2005