How safe is a Stop?

[S.R.G.]

Greetings all,

There is something of great importance that everybody seems to take for granted, which unfortunately never comes to be discussed.
Or is it me not being able to find the right thread?

The issue is Stops

Every thread discussing a theory or actual systems is being disected it is mentioned "then you/I will be stopped out" BUT what are your guarantees?

I would like to hear other peoples experience and thoughts about this subject.

My thoughts are:
If you like to make a successful living trading FX (or anything else for that matter) you should not allow anything to happen, which you haven’t made a plan for.
How you can make sure of this…? When opening a position stay around, if you do not want to make that “sacrifice” get out since there are plenty of opportunities coming your way.

You do not have to have a higher IQ than average, you do not have tens of thousand of $ to successfully trade the markets (even though it helps) BUT you can not afford to be lazy by not doing your homework (every day) and hope someone else will do it for you.

Regards,
S.R.G.

Show me a successful trader that says trading is supposed to be all about fun and glamour?

[mishak]

Hello S.R.G.

you can not afford to be lazy by not doing your homework (every day) and hope someone else will do it for you

Completely agree with you. That is why a trader should know where "his" stop should be placed - at the point where the market proves that the trader was wrong with his assumptions/predictions.

When opening a position stay around,
if you do not want to make that “sacrifice” get out since there are plenty of opportunities coming your way

Myself is too lazy to stay monitoring my open position. I have brokers to do this work for me 24H and I pay them spread for that.
Myself do not like to make "sacrifices", but I understand the inevitability to take some risk in order to perform better than bonds.

[Nonpiker]

The bottom line is that hope is not a viable investment vehicle. The sooner newbie traders learn this the better off they will be. I always put a position on knowing where my exit will be on both the top side and down. When I take a position, I have a premise of what will occur, if this does not happen then I exit. This will somtimes cost you P&L when you watch a long run higher however, when an adverse move occurs this action will allow me to be around to play tomorrow. Discipline (money management) is by far the hardest aspect to master but it is truly what seperates the best from everyone else. What good is it if you pick great entries and bank a big figure when you let your losers run two. Good traders can pick winners but the best traders know when to take a loss.

[S.R.G.]

Thank you both for your valid input Mishak and Nonpiker.

The core of my question is though how safe can a person feel when they place a S/L on their position and head off to bed or go elsewhere?

This is to me something which I react to when reading 100’s of posts where everybody is taking the action of a S/L for granted.

Another thing which I think people write far too little about is the advantage of scaling in and out of positions. Any comments on that as well?

//S.R.G.

[yasirdxb]

originally posted by S.R.G
The core of my question is though how safe can a person feel when they place a S/L on their position and head off to bed or go elsewhere?

Much more than a person who dont place a S/L on his position and head off

to bed or go elsewhere!

I'm not saying that by placing a S/L order you are safe from any unexpected

losses. Of course there are spikes and ect...we can do nothing about it.

originally posted by fxscalper90
After all, a SL is nothing more than a request, wish, desire and attempt to limit your capital to exposure to a drawdown

Thats correct! what is important is to have that wish,desire and attempt.


"You cant make money if you are not willing to lose.Its like breathing in, but

not being willing to breath out." - Ed seykota

[S.R.G.]

All valid comments..

But the point I am trying to get to is that way too many people enter the game of forex (then often undercapitalized) thinking O'well as long as I have placed a S/L in the market I am certain of not loosing more than the amount"

Please do not misunderstand me by thinking I am against placing a S/L - what I am trying to make a point of is that I get a big scared reading all these posts where people seem to take the limited loss of a placed S/L for granted.

Unless someone know what they are doing and aware that this can generate a way bigger loss than they expect I think someone always should be physically present when active.

Regarding my other comment/question on why so few people seem to scale them self in/out of their positions. Am I the only one person thinking of this kind of diversification?

[mishak]

I believe that one should be more scared while driving a car on highway than leaving your monitor after placing the stop order on forex.
I guess the majority of 13,000+ members of our Forum are trading demo money or small accounts. When you have capital of $300 invested in Forex you have nothing to diversify.
Tiny 10k and "standard" 100k lots usually are not cleared thru the market, so it is the computer who executes orders on them. And there is no problem for him(it) to stay awaken 24H and make slippage=0.

Forex spot market is not like stocks or futures where a trader is facing price gaps all the time.

If your are trading majors - slippage is minimal.
If you are in the middle league - tens of thousands account size - then you can press your broker in case of big slippage, to post about him on forums, report to regulators etc. and in most cases he'll give you your slippage back.

For the big league where you have tens of millions open position you have the last resort to sue your broker for damages and probably will win. It is a good idea to have at least two brokers/banks for big money. And stay ready to "some" slippage.
Anyhow you may call to the treasury of your bank or Reuters to get second opinion about highs/lows, volatility on the market at a specific moment and press your broker.

[S.R.G.]

Originally Posted by mishak

I guess the majority of 13,000+ members of our Forum are trading demo money or small accounts. When you have capital of $300 invested in Forex you have nothing to diversify.

Mishak, great feedback as always.

Still when/if you have $300 invested in forex would you recommend that person to enter a position with all $300 at once?
What I mean by diversify is that it seems that far to many people which shouldn't; open a position all at once on a pure win/loose basis.

My philosophy is probably considered rather boring for most people... especially when forex is all about quick money and feeling the dopamine rush of seeing your money in the market, right?..

That is why I added my other question; if other people on the board have any thoughts/experience to chare about various perhaps “boring” strategies that are based on scaling in and out of positions?