Surprising Results of NOT keeping a Stop Loss..!!!

zeekid · #1 12th January 2008, 12:35 PM

I am neither a forex trader nor a day trader....

I just registered for a free virtual forex trading account... (the primary objective was to get a feel of trading with help of realtime intraday candle-stick chart and that too for free!

)

In the beginning, my stops (which were fixed @ 20 pips) were invariably hit and soon I lost my virtual 1000$

. Ofcourse, the trading was hunch-based!

Then I again registered with 3000$ and this time decided to use some indicators etc.

So, my setup was :

Currency : GBPUSD

1] Candle Stick Chart {1min. & 15min.}
2] Moving Avg. Cross-over {3,15 Close}
3] CCI {14}
4] Bulls Power {13}
5} Awesome Oscillator
6} Take Profit : Fixed between the range 15 - 30 pips

I based my decision on (1) Moving Avg. crossover, i.e. 3-day crossing above 15-day, and (2) Awesome Oscillator crossing above the signal line, these were my signals for buy and the reverse of above conditions were my signals of sell.

I entered a total of 8 trades on friday, starting at 10.40 AM, out of which closed 6 with gains of 127 pips (a virtual gain of 1270$)!

Two of my trades are still open - shorted 3 lots of GBPUSD and bot 1 lot of GBPUSD

Now, in all the above trades, I did NOT use Stop Loss

, which is a MUST in day-trading and I personally will never risk real money in this manner. But the results are quite astounding - six trades closed with profits and two in red (down 650$), but still open and can go in green or can be closed with minimum loss.

Now, what I want to ask is : How can S/L give losses and NO STOPS strategy give you profits?

Nitesh

Market Wizard · #2 12th January 2008, 05:09 PM

Quote:

Originally Posted by zeekid

I am neither a forex trader nor a day trader....

I just registered for a free virtual forex trading account... (the primary objective was to get a feel of trading with help of realtime intraday candle-stick chart and that too for free!

In the beginning, my stops (which were fixed @ 20 pips) were invariably hit and soon I lost my virtual 1000$

. Ofcourse, the trading was hunch-based!

Then I again registered with 3000$ and this time decided to use some indicators etc.

So, my setup was :

Currency : GBPUSD

1] Candle Stick Chart {1min. & 15min.}
2] Moving Avg. Cross-over {3,15 Close}
3] CCI {14}
4] Bulls Power {13}
5} Awesome Oscillator
6} Take Profit : Fixed between the range 15 - 30 pips

I based my decision on (1) Moving Avg. crossover, i.e. 3-day crossing above 15-day, and (2) Awesome Oscillator crossing above the signal line, these were my signals for buy and the reverse of above conditions were my signals of sell.

I entered a total of 8 trades on friday, starting at 10.40 AM, out of which closed 6 with gains of 127 pips (a virtual gain of 1270$)!

Two of my trades are still open - shorted 3 lots of GBPUSD and bot 1 lot of GBPUSD

Now, in all the above trades, I did NOT use Stop Loss

, which is a MUST in day-trading and I personally will never risk real money in this manner. But the results are quite astounding - six trades closed with profits and two in red (down 650$), but still open and can go in green or can be closed with minimum loss.

Now, what I want to ask is : How can S/L give losses and NO STOPS strategy give you profits?

Nitesh

If your money was on the line, would you have allowed the two losing trades to remain open upto this point, giving back half of the profits that you made on the six winning trades ?

The stop loss would get you out early from a losing trade, minimising losses on a bad decision and protecting the profits from the six winning trades.

[/quote]but still open and can go in green or can be closed with minimum loss.[/QUOTE]

This statement is showing that you are now trading emotionally under hope.

zeekid · #3 12th January 2008, 07:11 PM

Quote:

Now, in all the above trades, I did NOT use Stop Loss

, which is a MUST in day-trading and I personally will never risk real money in this manner.

You might have missed the captioned part in my 1st post, so its reproduced above.

I am opposed to trading without stops and fully understand the importance of stop losses, but was wondering how, in my particular scenario, maintaining stops gave me losses and trading without them got me six in a row..!!!

I think such good fortune very rarely blesses the day traders and maybe this was one of those lucky days...

kkseal · #4 12th January 2008, 07:45 PM

I am not astounded at all Illogical fixed-this-or-that stops usually do more harm than good.

Regards,
Kalyan.

zeekid · #5 12th January 2008, 10:18 PM

Quote:

Originally Posted by kkseal

I am not astounded at all Illogical fixed-this-or-that stops usually do more harm than good.

Regards,
Kalyan.

maybe, it had more to do with the system of fixing stops/gains.... but I had in mind 1:1 r/r ratio, so for my target profit of 15-30 pips i'd kept the s/l @ 20 pips from the trade price.

i understand, being a newbie to TA, I have a long road ahead and s/l, trailing stops, timing of entry/exit are some of the things which i'll hv to learn, by reading or like this - playing virtually.

kkseal · #6 13th January 2008, 02:03 PM

What i meant was that the SL should be as logical as the entry/exit. If a logical stop does not exist 2%/20pips (or whatever other fixed measures you want to use) one must accept the fact that it does not and adjudge ones RR accordingly (i.e. ether you skip the trade or be aware of the fact that you're taking a higher risk). Just because you find 20 pips/2% (or whatever) 'comfortable' doesn't mean the mkt is going to oblige you by not breaching those levels.

The stop is an integral part of the trade and as such shouldn't be bereft of logic imho.

Regards,
Kalyan.

rsalecha · #7 14th January 2008, 04:11 PM

can anyone teach me how to trade on forex