Psychology of a Stop-loss

[mwbro]

hi all,

i am just sitting here watching my charts and was in thought on the concept of setting a stoploss and not changing it. i wish to share this with you...

Not having a stoploss or changing the stoploss midway puts me in self denial i made a bad trade and i dont want to face it, i try to manipulate the trade (the truth) the market told me 20 minutes ago i was wrong but i still want to challenge the market and the fact is I dont even have the equity to wait for a turnaround on the market, i lose again. i lost over half my account just by manipulating my stoplosses (living in denial).

on the other hand:
Having a stoploss (and not changing it) is a great tool to learn to be a better trader and a better person, having a stoploss helps me to face the truth that i made a bad trade, bad timing or simply the market had another plan and learn from this (such is life). It teaches me that some losses as OK. Having a stoploss gives me peace of mind. Having a stoploss teaches me to improve my timing and edge, its teaches me to trade mechanically and not emotionally, and of course having a stoploss also greatly enhances my money management, my account is growing again

nice to know i can learn about accepting truth and being humble in life while fx trading these are great characters traits to have and to build on


trade on

mwbro

[Ugly_Dog]

Agree mostly, but have seen times when spike takes my stop out and trade was right!?

[datagram]

SO TRUE!!!

See also http://www.moneytec.com/forums/showt...08&page=5&pp=8

for more about stop loss.

[Fxexcel]

mwbro,

Hello, how is everything?
I agree with you, using a stop loss puts your mind in shape, because every trade has a probability to fail, facing that fact by using a stop loss make us better trader. Losses are ok, as long as the trades were made by our system, they shouldnt be considered as mistakes. A loss, or even a win outside of our system guidelines is a mistake. And it can have catastrophic effects in our trding career.
A stop loss order is a "security" measure, if we dont use them, a sole trade could wipe our trading account.

Regards
Fxexcel
www.straightforex.com

[MrMee]

Hello,

Yes I have of some people screaming on top of their lungs that stop-losses are for kids and aren't used at all by pros.
But the way I see it, stoploss can be great if they work for your strategy and even if they don't you can feel safe if your electricity goes out or something happen.

[Leonardo.1977]

Hi,

I totally agree with you, A stop is a safety net, which limits the damage from any bad trade. You have to structure your trading in such a way that no single bad loss, or a nasty series of losses, can damage your account.Stops are essential for success.

Especially good skills in setting stop loss order could bring us peaceful mind. That's great!

Regards.
Leonardo1977.

[cyberwave]

I do not know what to say,..very tough topic,..specially for a poor guy like me

i will share my yesterday experience

i went into this trade with my stop 20 pips away (to avoid losing more than 3% of my account) .. i found myself in a position where i will be stopped out

but i only put the stop where i did because the size of my account but my mechanical technical stop should have been further

so i moved my stop to what i think is a more intellectual stop

my original stop level got hit...but my mechanical stop did not get hit...i was correct and the market bounced back my way

however it means i entered the trade too early and it is a problem i am facing which is the following


i will not always be right..if i was wrong that time about my mechanical stop i'd have lost 7% of my account in one trade which is a huge amount.. and my trading life will be over soon...

I really think if someone has less than 50K he should not trade forex otherwise his risk will be larger...because 20 pip move is very normal noise that easily happens before the market decides the direction

[PapaiNoel]

You are right STOP LOSS helps me to know I am still in THE GAME. I am always losing big when I don't have one. I have to learn to control my emotions...