Stop Losses are for Losers

Discussion in 'Risk Management' started by chewbacca, Feb 4, 2008.

  1. I think If a person does not use stop losses it is very dangerous
    Proper sizing $ and intelligent trading and a stop loss to know how long to hold your losses,.
     
    #31     Feb 4, 2008
  2. Sure,

    Here is a link on bankroll management. Which basically means using a conservative strategy of many "tiny" positions that scale up as you earn more. Poker players that last longer do because of the conservatism of their positions, no one position will destroy the player.

    link

    Here he is talking about his success and losses using this strategy:
    link

    So I've basically taken this to heart. Now I never take a position that is more than 1-2% of my entire portfolio. The worst I can ever lose on any one position is that 1-2% even if it goes to zero. If the markets move against me, I add more VERY SMALL positions. My entire position sizing is essentially my stop loss. This way I don't have to worry about stop losses. Going to zero is my stop loss and an acceptable loss.
     
    #32     Feb 4, 2008
  3. IMHO there is a difference between "no stop" and "a wide stop" --- the former can be a dagger through the heart on a bad day
    -- the latter is almost a necessity the way the markets are moving at the moment
     
    #33     Feb 4, 2008
  4. I doubt the guy has funded a "live" account in years.
     
    #34     Feb 4, 2008

  5. I had this very same conversation over about 6 beers and a cigar with an experienced trader-friend this weekend

    One day I missed 2 entries by 1 point
    The next day I got stopped out 1 point on 2 trades

    I was startin to suspect the folks who could see the entire electronic book were cleaning out my stops along with alot of other suckers

    my trader friends remark was --- 'if you are getting stopped out by 1 point - widen your stops --- you are too granular!"
     
    #35     Feb 4, 2008

  6. I tried this a couple weeks ago - and was very sad one day when the market moved the wrong way big time ---- and I could not get a fill even though I hit that freakin buttom 10 times

    :)
     
    #36     Feb 4, 2008


  7. thanks, man. awesome stuff!

    surf
     
    #37     Feb 4, 2008

  8. he didn't lose all that money because he didn't use a stop......he lost it because he went all in against the trend and probably averaged down to the point where he was massively overleveraged..........i'm not saying a trader should marry his position......i'm saying he needs to take profits and losses based on market action and not based on $........listen to the market and follow its lead.......don't make impulsive decisions based on fear/greed.

    wareco.....i've seen the light....but those are still good risk management features on days you wake up on the wrong side of the bed and want to trade for thrills.
     
    #38     Feb 4, 2008
  9. "- are undiversified; they put all their eggs in one basket hence they want to protect their basket"

    That's me. But I never go against the trend, and 'I never let a profit turn to a loss.' Solution.....trailing stops.
     
    #39     Feb 4, 2008
  10. What? Your goal is for the stop NOT to get hit. If it gets hit, 9 times out of 10 it's going to help you. If you can define risk in a market why not put a pre-defined stop there?

    In addition, what's wrong with a trailing stop?

    This post has to be one of the "random thought" posts.

    And you keep saying "go long a trend" like it's cake to do, and never reverses lol.
     
    #40     Feb 5, 2008