If anyone out there had any thoughts, feedback or experience of trading WITH stop losses I'd be interested to hear them.
I've tinkered with stop losses for some time now and have mixed views, mainly:
* setting a stop of 2 or 3 ticks invariably gets caught by spikes in the price
* when such a spike happens it is maddening to see the price move more or less back to the point you entered - this happens with such frequency I ask myself "is someone watching what I'm doing!!?"
* off course on those occasions where the price really does head against you then a stop loss saves any emotion and exits the trade for you
My question really then is, if adopting a stop loss is there an accepted number of ticks that will allow your trade the space needed to breath?
Thoughts much appreciated.
To 'stop loss' or not?
I wouldn't recommend anybody using the stop losses feature - stop losses will take you to the poor house, a complete & utter waste of money
It may have uses for people leaving their computer, or traders doing complete automation, but by & large, stop losses will often cut you out for an unnecessary loss just because there was a temporary gap in the market.
It may have uses for people leaving their computer, or traders doing complete automation, but by & large, stop losses will often cut you out for an unnecessary loss just because there was a temporary gap in the market.
Hi,
I have to agree with a lot of what LeTiss says, but still think that stop losses have their place, in two instances.
Firstly in maintaining discipline if you have problems taking a loss in fast moving markets and secondly, if you're attempting to catch one of those moves where all the money is taken "instantaneously".
In the latter case I put a stop loss on just in case there is a trend starting rather than just a "blip",
cheers, P
I have to agree with a lot of what LeTiss says, but still think that stop losses have their place, in two instances.
Firstly in maintaining discipline if you have problems taking a loss in fast moving markets and secondly, if you're attempting to catch one of those moves where all the money is taken "instantaneously".
In the latter case I put a stop loss on just in case there is a trend starting rather than just a "blip",
cheers, P
Hi A
I did some testing a while back in trying to determine whether or not to use stop losses..see :-
viewtopic.php?f=2&t=2285
In summary; I never trade out now for a loss..(I'm sure other on here will totally disagree, but that's what works for me!)..
Good luck
Regards
Peter
I did some testing a while back in trying to determine whether or not to use stop losses..see :-
viewtopic.php?f=2&t=2285
In summary; I never trade out now for a loss..(I'm sure other on here will totally disagree, but that's what works for me!)..
Good luck
Regards
Peter
...and the answer is: 4/5 ticks.ackeiyword wrote:If anyone out there had any thoughts, feedback or experience of trading WITH stop losses I'd be interested to hear them.
I've tinkered with stop losses for some time now and have mixed views, mainly:
* setting a stop of 2 or 3 ticks invariably gets caught by spikes in the price
* when such a spike happens it is maddening to see the price move more or less back to the point you entered - this happens with such frequency I ask myself "is someone watching what I'm doing!!?"
* off course on those occasions where the price really does head against you then a stop loss saves any emotion and exits the trade for you
My question really then is, if adopting a stop loss is there an accepted number of ticks that will allow your trade the space needed to breath?
Thoughts much appreciated.
Of course there is a world of difference between actioning a Stop Loss at any given point and using the BA mechanical option. IMO the mechanical option can only be used to set an upper limit Stop (say 8/9 ticks away) where you are just not prepared to lose any more than that. It is useless in the fast moving markets of Betfair for one simple reason and that is that it will trigger if the Stop is reached when there is a gap formed in the market. Perhaps Peter will comment on my own findings and that is that very often the current odds (back/lay) in the ladder can be up to 5 ticks away from the last traded price at any time. Whilst traders are watching the odds move in the ladder, a lot of them are unaware that no bets are actually being matched at those moving odds and thats when the mechanical BA Stop may trigger.
Active traders need to be well on top of their trade and be prepared to manually stop out when the required loss is reached (as defined in their strategy). For swing traders this might be 4/5 ticks, for scalpers maybe 1/2 ticks. The reason for these levels of stops is down to a 1-1 ratio of losses to gains for an average trade.
I don't accept that some traders refuse to stop out..no matter what loss they are facing
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aligammack
- Posts: 104
- Joined: Wed Apr 15, 2009 2:49 pm
James,
From previous posts you seem to have good knowledge of trading and strategies so I was quite surprised for you to state “the answer is: 4/5 ticks”. Surely there is simply no right and wrong answer to this question. Different successful trading styles will have completely different stop loss requirements.
When I’m closing a trade I am doing it for the exact same reasons as I opened the trade.
For example..If I feel (using my indicators) that the market is going to drift but it starts to come in I will only close for a loss if I now feel the market is going to continue coming in. If I still believe that the market will drift then I will keep my trade open.
This is exactly the same as when I’m in profit and I need to close my profitable trade. I will close when I feel there is going to be a substantial reverse.
So in terms of stop losses, sometimes they are 1 tick, sometime 4 ticks, sometimes 8 ticks, all depends on my indicators and my feeling of the market direction during all stages of the trade.
I welcome your comments.
From previous posts you seem to have good knowledge of trading and strategies so I was quite surprised for you to state “the answer is: 4/5 ticks”. Surely there is simply no right and wrong answer to this question. Different successful trading styles will have completely different stop loss requirements.
When I’m closing a trade I am doing it for the exact same reasons as I opened the trade.
For example..If I feel (using my indicators) that the market is going to drift but it starts to come in I will only close for a loss if I now feel the market is going to continue coming in. If I still believe that the market will drift then I will keep my trade open.
This is exactly the same as when I’m in profit and I need to close my profitable trade. I will close when I feel there is going to be a substantial reverse.
So in terms of stop losses, sometimes they are 1 tick, sometime 4 ticks, sometimes 8 ticks, all depends on my indicators and my feeling of the market direction during all stages of the trade.
I welcome your comments.
Totally agree aligammack, different styles different stop losses. However the OP is Swing Trading (see his other post) and he is therefore, by definition, bound by his process to enter a trade with the anticipation of making at least 4-5 ticks (or better by random chance) and besides anything less than 4 ticks is, in my book, just a big scalp. Assuming he is operating a 1-1 ratio at minimum, he can therefore justify a 4-5 tick stop loss.
Any movement of 4/5 ticks, given the correct conditions, can be described as a "swing" as opposed to < 4 ticks which is regarded as a pullback.
Obviously I am talking averages as shorter/longer priced and more/less volatile races require slight adjustments to a stop loss.
As an overall observation of the BF markets, its reasonable to assume that any movement of 4/5 ticks against you in a swing trade means that you are trading in the wrong direction.
Everyones style is different and stops have to reflect a profit/loss strategy based on simple maths. If your strategy calls for frequent variation of the stops, then so long as it works its the correct approach.
Any movement of 4/5 ticks, given the correct conditions, can be described as a "swing" as opposed to < 4 ticks which is regarded as a pullback.
Obviously I am talking averages as shorter/longer priced and more/less volatile races require slight adjustments to a stop loss.
As an overall observation of the BF markets, its reasonable to assume that any movement of 4/5 ticks against you in a swing trade means that you are trading in the wrong direction.
Everyones style is different and stops have to reflect a profit/loss strategy based on simple maths. If your strategy calls for frequent variation of the stops, then so long as it works its the correct approach.
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aligammack
- Posts: 104
- Joined: Wed Apr 15, 2009 2:49 pm
Hi James,James1st wrote: Obviously I am talking averages as shorter/longer priced and more/less volatile races require slight adjustments to a stop loss.
My point exactly. Every race is different therefore I feel it is unfair to say ...and the answer is: 4/5 ticks.
Even if you just focus on one race, stop loss requirements are going to vary so much even if you just focus on time before the off.
Ali
i think stop losses are a waste of time
the only reason i ever used them was because i lacked discipline at the time,
i quickly realised that althoe it was stopping out the bid losses i was taking lots lots more smaller losses when if manually trading i would not have.
swings and roundabouts imo
the only reason i ever used them was because i lacked discipline at the time,
i quickly realised that althoe it was stopping out the bid losses i was taking lots lots more smaller losses when if manually trading i would not have.
swings and roundabouts imo