If your core trading strategy has a positive expectancy, then stops work just fine. We set both a profit target and a stop-loss level at the time of trade entry.
u decrease the "if" (psychological factor) by increasing the account size. For example, if u have too many "ifs" u increase from $100k - $200K per contract. The $100K minimum per contract is there to control the emotion and go on to trade with your advanced mathematics methods (not indicators u see in any generic software such as Fibonacci, SMA, pivot, price action, bollinger, whatever those ancient outdated indicators no longer work in today modern HFT trading) because advanced mathematics do not compute emotion. Now, placing stop loss is for loser. Too bad small traders u don't have the capital to play this game TOO BAD
Also, the $100K minimum per contract is there to prepare for the crash. If you are too emotional, then increase the size $300K per contract or perhaps $800K per contract. That is all depend on your emotion. Remember, this trading system (nyse, nasdaq, cme, eurex) is only built for big traders and institution, and not for small traders (POOR). u think placing stop loss is an excellent risk management or increase your account size to $500k per contract is the excellent risk management? small traders keep getting stopped out because small traders are lower educated and poor.
Well, my P&L isn't fluctuating around 0, so I guess I will have to take your word for it. I don't mean to be flippant, because it does seem like you've put a lot of thought into your position, but I have done 110 trades on the ES in the past year and a total of exactly 2 have had their stops hit before I was able to move them. And those 2 weren't even the 2 with the largest distance between entry and stop, so they turned out to be only slightly above average losses. So, I gave back a couple percent of my overall gains on those losses. Applying the same stop logic to my application of the strategy to the Euro, exactly 1 out of my first 33 trades had its initial stop hit. 2 out of my first 41 trades in Crude. That would have to be one hell of a reversion to the mean if my stops are going to start getting hit so frequently that my P&L fluctuates around 0. So, it does happen that setting stops will "on occasion" lead to me taking a loss I don't necessarily have to take, but 97% of the time, it's there as a backstop to prevent disaster and becomes irrelevant within an hour. Obviously, I've modeled out the requirements for this to happen because statistically it would be virtually impossible for someone to get that lucky on three different instruments over a 1-year time period, at least according to any statistics I've ever used. One of the unfortunate things about trading being a zero-sum game is that the ability to share ideas is severely curtailed. In a perfect world, I'd tell you how I set and move my stops and you'd respond "Hmmm, I never thought of that. That's definitely a conceptual breakthrough that might eliminate the tendency of strategies utilizing stops to fluctuate around a zero P&L." As it is, all I will say is that we'll have to agree to disagree on the usage of stops. Also, if it puts your mind at ease a bit, I have an MBA from a top-tier b-school and I have been thinking about this for years.
The underlying of what emg is saying is correct, but the values given are way exaggerated and his statements are false. He probably is so stubborn because part of what he says makes sense, but for some reason he takes it to the extreme. Are you really suggesting someone should keep 100k in their futures account in order to trade 1 lots or are you just talking about net worth in liquid assets? I don't know but no reason to keep 100k in a futures account and trade 1 lots. There is truth that using too much leverage can destroy you mentally and keep you from trading the correct way, but there is no hard and fast rule on this. Secondly, you don't turn a day trade into a swing trade because you haven't gotten that small profit yet. There should be some sort of stop though you won't care if it gets hit because the money lost isn't that large relative to your net worth. You also have to consider opportunity costs in waiting for that trade to go your way.
the only rules i follow are the CME, Clearing/Brokerage and CFTC. i don't know what rules u follow. time to reload your account small trader?
I don't know about you, but I count opportunity cost as a real loss. So I should hold a loser for a week or more just to get 1 es handle of profit, lol? Get real. You're ridiculous. Might as well not trade and put your money in an income generating instrument. You'll get the same profit with less work unless you just trade for fun.
I think you are the loser for assuming that yours is the only way to trade profitably. I use stops, I won't stop using them, I do well. Nothing else to say.