[AuctionMarket_Trader]

I personally do not use stop losses instead i manage my position (however i typically have a 10 point crash stop which i have yet to take once). I think this is a big fallacy in the industry and one of the reason why over 90% fail ... just wanted to hear everyone thoughts....

[MightyMouse]

I never trade futures without a stop. The stop size is a function of the size of the account, the type of trade, and your tolerance for pain.

When I do get stopped out, which is frequently, I have no bones about getting back in. A lot of times it would have been better if I had not had a stop because I take a loss get in at a worse price from my original entry plus the loss. Other times it is a saving grace and I can laugh because I was completely wrong and would have gotten killed if I let price go all the way to what I deem to be support or resistance, but I got out with a small loss. Then there are other times when I enter and price just screams and it wouldn't have mattered if my stop was 1 tick or 100 ticks away because I got it right.

Gains are not going to kill me. Losses combined with an extra dose of bad luck will kill me. Using stops gives me ultimate control over whether I live or die.

[Tams]

the fool and his money shall soon depart.

someone said that... don't remember who.

[electroniclocal]

Wrongly placed stops are one of the main causes of traders' losses. A drop dead stop is a must and I calculate mine by backtesting. However, a back tested stop is not appropriate for every trade as every trade is different eg context and volatility. So my drop dead stop means that this is where I exit come what may. In practice, I stop myself out when market activity tells me I am wrong. When i enter a trade, I have my generic stop and targets triggered by my software. I then manage each trade, moving both stops and targets to where they belong in that specific trade.

[TheNegotiator]

I agree with el here. So many times I've seen traders put stops in silly places and inevitably get stopped out on what turns out to be a great trade. Not infrequently, you get stopped out to the tick. I don't think this is coincidence either as if you think about it, if it turns out to be a good trade, it's just the traders who are in the red on the trade who are exiting and not new trades being placed. So being stopped to the tick or close to that is not surprising imo.

The most important thing about stops though and why they can be a real hinderance is poor entry position. Not waiting for the optimal entry position for your technique due to lack of market awareness in general or lack of focus on the market, or just inexperience has the potential to stop you out before you even enter the trade. I know people have written that actually entries don't necessarily matter in the long run, but if you find yourself being stopped out a lot(so long as you're not trading with a single tick stop or something silly) before the market turns and goes in the direction you'd hoped, take a look at those entries. Think about it. Most traders risk a maximum percentage of their account on each trade. If you enter in the wrong place or on the wrong swing, you end up messing up your r:r by changing the size of your trade so that you can afford to get stopped out where you are wrong as well as within your account parameters or you get stopped out before you are wrong.

[tradeemini500]

I always trade with a stop. I believe there has to be a point where you admit you were wrong on this particular trade/idea and you move on to the next trade. Where you put your stop is another story/another post, but I couldn't imagine trading without a stop loss.

[MightyMouse]

Originally Posted by electroniclocal »

Wrongly placed stops are one of the main causes of traders' losses. A drop dead stop is a must and I calculate mine by backtesting. However, a back tested stop is not appropriate for every trade as every trade is different eg context and volatility. So my drop dead stop means that this is where I exit come what may. In practice, I stop myself out when market activity tells me I am wrong. When i enter a trade, I have my generic stop and targets triggered by my software. I then manage each trade, moving both stops and targets to where they belong in that specific trade.

What is a wrongly placed stop? Is it one that is too close or one that is too far?

[johnw]

Originally Posted by MightyMouse »

What is a wrongly placed stop? Is it one that is too close or one that is too far?

1 ...It is a stop placed with no thought given to the direction and strength of the upcoming momentum.

2 ...It is a stop that is carefully hidden in an obvious place

# 1 will negate # 2