Effects of not keeping a Stop Loss

madhava36 · #41 1st October 2007, 03:59 PM

Today, 02:52 PM
rkkarnani
..................
Despite these drawbacks, there are ways to improve the martingale strategy. In this article, we'll explore the ways you can improve your chances of succeeding at this very high risk and difficult strategy.
..................
In the example below, at two lots, you need the EUR/USD to rally from 1.2630 to 1.2640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.2625 instead of 1.2640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.2550, you only need the currency pair to rally to 1.2569 to break even on your entire holdings. This is also a clear example of why deep pockets are needed. If you only have $5,000 to trade, you would be bankrupt before you were even able to see the EUR/USD reach 1.2550. The currency may eventually turn, but with the martingale strategy, there are many cases when you may not have enough money to keep you in the market long enough to see that.
------------------------------------------------------------------------------------- Example please.

madhava36.

amarnath · #42 1st October 2007, 04:04 PM

Quote:

Originally Posted by ratan jain

Exactly, Amarnath: people who use simple martingales are suckers.

What u need are complex martingales.......

Something out of reach of most ordinary martingale users

And yes, a simple martingale will make a daytrader bankrupt in 10 trading days at most, in 3 days at the least

So, moral of story.........dont trade simple martingales.

I am sorry to say complex are no expection, simple or complex its sure way to path of ruin and any way thanks if any one trading martingale style to make consistent and successful traders job more easier

amarnath · #43 1st October 2007, 04:07 PM

Quote:

Originally Posted by madhava36

Today, 02:52 PM
rkkarnani
..................
Despite these drawbacks, there are ways to improve the martingale strategy. In this article, we'll explore the ways you can improve your chances of succeeding at this very high risk and difficult strategy.
..................
In the example below, at two lots, you need the EUR/USD to rally from 1.2630 to 1.2640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.2625 instead of 1.2640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.2550, you only need the currency pair to rally to 1.2569 to break even on your entire holdings. This is also a clear example of why deep pockets are needed. If you only have $5,000 to trade, you would be bankrupt before you were even able to see the EUR/USD reach 1.2550. The currency may eventually turn, but with the martingale strategy, there are many cases when you may not have enough money to keep you in the market long enough to see that.
------------------------------------------------------------------------------------- Example please.

madhava36.

It is more easy to follow price than keep averaging it in hope of recover and begging to mkt for reversal

ratan jain · #44 1st October 2007, 04:14 PM

Most welcome Amarnath:

Hope my trading style benefits your p/l account.

By the way, just as an after thought....do you know what complex martingales are??

amarnath · #45 1st October 2007, 04:38 PM

Quote:

Originally Posted by ratan jain

Most welcome Amarnath:

Hope my trading style benefits your p/l account.

By the way, just as an after thought....do you know what complex martingales are??

yes btw dont take it as offence , If like what you said is true and most real case then only doctrates in maths and stat alone can trade successfull the case which is true far in real world

PS: I dont want to over complicate simple thing like trading, in general i prefer KISS

amarnath · #46 1st October 2007, 05:07 PM

Final result if traded with no stop

rkkarnani · #47 1st October 2007, 05:20 PM

Read on the NET :

The Martingale System The most dangerous system in the world

THE WORLD’S MOST FAMOUS METHOD

Or

How to create Heart Failure.

amarnath · #48 1st October 2007, 10:05 PM

Quote:

Originally Posted by faltub

Let me ask the question more openly. As doumb gye want to ask what should be stoploss, near ma or 2% of capital invested ?
Suppose I buy nifty Fut at current rate 5063. Now last days low (on 4th Oct) will be 5011, 3 days ma 5028, 5days 4993 and 7 days 4962.
If I use 2% system the rate for stoploss comes to 4961 near to 7 ma.

Now the real problem that confuse me. The Original amount I invested is margian only and if I use 4962 as stoploss and if it hits the loss would be 5050 that is equal 20% of the original amount (used as margian) visa versa if I use 3 ma or last days low as s/l the loss amount will also be reduced.
What the seniors suggest ?

F

To be simple you are undercaptilised to trade in other words small fish cant dream to dive deep oceans

kuriako · #49 1st October 2007, 10:25 PM

In RJ`s language...

"U r trading with money less than that is required for a Dinner for two at TAJ"

Sorry RJ... Cant hold it...

BTW there are many under capitalised ones who want to feed P/L accounts of everybody!!!
A winner should never think of losing before going to war...

AND

A winner always wins before going to war. In the war he just defeats his enemy!!!

A stoploss could save u from erosion of capital, provided u caught the market during a drawdown period...

And if having no stoploss then u may need the martingale assumption that u are having unlimited supply of resource(money)

Assuming that all our trades wont go north, what is wrong with using stops?
And the quote again- Winners win war before fighting it!!!

Sorry if my view is a misfit in the professional discussion!

uasish · #50 1st October 2007, 11:46 PM

Forget what is written in the Books.Why we put Stop Loss orders ? Becoz we know that the outcome of my Trade is not known before hand,the instrument i am trading may reverse its present direction of motion.
Now say i make 10 trades with Rs 1.00 SL ,70 % goes against ,i loose Rs 7.00 ,hence in balance 3 trades if the Reward is less than Rs 3.00 i loose a portion of my equity capital.
So i put SL to check drainage of money in those trades which has gone against me.
Now what should be the module to determine that SL price level ?
A price level ,from where the Direction changes.If i know that !!!! (the direction changes from that level ) then should not i be reversing the trade in Double Qty.
We dont KNOW that hence ; ATR / % / below Supp / below Fib / below Trendline etc etc.
So we are back to square one ,we do not KNOW the reversal price level.
Here enters Simple / Complex all type of Money mgmnt / Risk Mgmnt etc for Less drainage of equity capital.
Now would not the approach be to test & find the actual effectiveness of these MM / RM on Random Entry basis ONLY.
Hence before all these our effort should be to find that Price Level,Impossible task ,OK then let us find out a way to overcome this,like Break Out ,Pivot etc.
Why Jesse was trying HH & LL , Saint on Pivot , we are breaking our head on lenghty discussion of Stop Loss & its module.

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