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JackWell

Do You Put Stop Loss Order?

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Totally agree that changing time frame might solve part of the problem, but not trained to take a trade on say the hourly and set the stop on the daily. Maybe should try.

Is there any difference between distribution line an resistance? Why do you use distribution and not accumulation?

BTW I recently viewed a webinar where they talked of "supply zones" and "demand zones", which to me equaled S/R zones, but they never outed the words S/R.

 

As for sufficient funds, we are assuming there are. Anyway if the likes of LTCM, Enron, Lehman, Madoff and PFGBEST could not have enough capital, will you and I ever have?

 

 

 

 

A final comment

 

I am just finishing a system that is aimed at retail traders who have been struggling along unsuccessfully....

 

it uses distribution lines as a frame work...so when price tests those lines, the trade is supposed to wait to see whether or not price is likely to fail or continue through in a sustained manner....

 

The system lends itself to several kinds of rules, but the one I like for amateurs is simple. You watch price test a distribution line. Price either "takes out" that line, in which case we wait for a retest (a retracement to that line followed by a failure), or price tests, takes out the line then reverses.....sometimes (of course) price goes into a horizontal range moving back and forth above and below that line....and the question (similar to Kuokam's point) is what do you do about that.....? and for me the answer is as simple as changing your time frame...for example if your data shows you that price tends to do this causing you to enter and get shaken out repeatedly....what about moving to the next longer time frame and applying the same entry rules.....many times this change alone will "fix" that problem...in other words its a system "design" problem...for my system...the issue you bring up shows itself on the 1 minute time frame, but not on the 3 or 10 minute time frame....so you adjust....you see what I mean...and of course this is just one of many issues that a trader faces...it could be (again just to provide one example) that even when you adjust your system as stated, it doesn't help...you then have to consider...do you really have an edge....do you have sufficient capital to trade at all?

 

If we go back to that same example....when price moves above and below a boundary, it is in effect displaying temporary supply and demand boundaries....what some call support and resistance...what about simply re-defining your system so that whenever you see this behavior you "define" the lower boundary of that congestion as support (an area where you might get long) and the upper boundary as resistance (an area where you might get short), then you look at your system and decide whether you can determine trend on the longer time frame...if you can you now have a viable system....one where you simpy wait for these congestions or sideways ranges to occur.....then you enter based on your new logic (trend determined by the next time frame)....

 

Finally, if one is having the problem Kuokam brings up....one way to minimize that problem is to use highly correllated market to help confirm entry decisions...in my system I use two markets (DAX and ES for example) because for me the DAX serves to confirm that my decsion is correct, or if the entry is not working, to provide sufficient data to motivate me to close the trade BEFORE I take a significant loss.....again it is a matter of intelligent design and ability to evaluate the data...

 

These are things that a skilled system developer considers...then they obtain the data and evaluate the possibilities...as with all things, some are good at it, some are not...and perhaps should consider opportunities in other areas of business..

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Totally agree that changing time frame might solve part of the problem, but not trained to take a trade on say the hourly and set the stop on the daily. Maybe should try.

Is there any difference between distribution line an resistance? Why do you use distribution and not accumulation?

BTW I recently viewed a webinar where they talked of "supply zones" and "demand zones", which to me equaled S/R zones, but they never outed the words S/R.

 

As for sufficient funds, we are assuming there are. Anyway if the likes of LTCM, Enron, Lehman, Madoff and PFGBEST could not have enough capital, will you and I ever have?

 

 

Well, clearly I am biased however I think ALL of the things I mentioned should be seriously considered...

 

There are significant differences between my distribution lines and "classical" support/resistance....the simplest way to understand this is.....support & resistance lines are meant as "lines in the sand" creating (just what the label says) support against price moving south, or resistance against price moving north...classical S & R has no statistical basis.

 

My distribution lines have a statistical basis and are meant to contain price action within certain boundaries on any given day.....sorry but I am not willing to go into great detail regarding how they are created..

 

What matters to me, is not the definition but how they (either tool) can be used to create a profit....

 

Regarding "sufficient funds"...all systems have an expected drawdown...usually that expectation is unrealistic and will be exceeded at some point in the future....skilled participants can estimate what the proper level of required capital is, and they try to stay above it...part of that is the responsibility to manage leverage as well......some of the businesses that you mentioned had sufficient capital but took excessive risk in relation to the capital they had on hand....there is a balance there that you have to manage and if take on too much risk in relation to the capital you have on hand, and things go against you (the previously mentioned drawdown), odds are you (your trading business) will fail....

Edited by steve46

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Do you put stop loss order? I read in some places that it is not a god idea to set the stop loss in the system because the experts know where you set it and can "shake you out" of the positions. So do you use stop-loss?

 

it's necessary to use stop loss...i recommend to use stop loss and take profit and not touch them until operation will be closed automatically

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Take profits? How about the forth commandment "let your profits run" ?

 

 

it's necessary to use stop loss...i recommend to use stop loss and take profit and not touch them until operation will be closed automatically

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Do you put stop loss order? I read in some places that it is not a god idea to set the stop loss in the system because the experts know where you set it and can "shake you out" of the positions. So do you use stop-loss?

 

I always use a stop loss because it mentally frees me up from worrying if I look away for a second or too. As you know, things can happen really fast. Remember the flash crash? Too many things can happen that are out of our control and can leave us lamenting. I feel that psychologically when you set a stop loss you are mentally ready to take that risk and now how much that risk will be.

Stop losses keep your trading in check because the probabilities are always limitless...

Great question!!!

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I place stop loss in every order to reduce my risk. My question is who is the expert mentioned in the thread. Market will not move according to my sl position. So I prefer placing stop loss than having margin call or stop out.

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I place stop loss in every order to reduce my risk. My question is who is the expert mentioned in the thread. Market will not move according to my sl position. So I prefer placing stop loss than having margin call or stop out.

 

if you are having margin call, you should consider your position size...that does not sound safe...

you should always be able to run away to survive, to fight another day.

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Stop orders require caution . Unfortunately stop orders become stop profit orders. people dont use them when the market moves to the wrong direction as they believe the market will turn to their favor but they do use them when they are "making money" as they are afraid they might lose their profits .

 

My advise is use the stop loss order for the purpose it was ceated ie a stop loss and not a take profit order . Try figuring out the accepted loss the moment you make a trade (ie keep a mental stop loss or actually put it as when the market moves against you it moves too fast)

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Stoplosses is the only control you have to limit your risk in the market, they are mandatory!
mitsubishi should know about this as he claims to have blown 6 accounts. even now he holds through drawdowns that could shrivel many trader's up like a prune. but since he likes to spread bet gambling must be in his blood.:haha:

 

he may take issue with the words "ONLY control" and mandatory..

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Stoplosses is the only control you have to limit your risk in the market, they are mandatory!

 

And yet, speculators get paid to facilitate the transfer of risk. There is an inherent tension between the need to limit risk and the need to maximise profit. Are you CERTAIN that stop losses are the best way to resolve this tension?

 

BlueHorseshoe

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plus throw in the concept of staggered time frames and even the market makers...and algo's wouldn't know where to gun the stops as they would be all over the place so thinking you could keep your stop out of their reach ..well...it wouldn't work....

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