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Pro tip: enter your position at the price where you would set your stop loss. Then put your stop loss below that which will invalidate your trade hypothesis. Also, ideally, the stop loss should be placed at a place, where market structure will be broken if price breaches that level. Market leans on a structure i.e. trend lines, ema/dynamic support resistance, fib levels, horizontal support resistance. Stop loss should be below the market structure where if it ever breaks, it is expected to go a lot lower . This way you can enter at a better cost basis later even though you might incur small loss bow.
I tested without a stop back in March. Scalping. I had days with maybe 80 % success and still I had days with 150 pips loss. The problem is that it only takes one trade without stop and maximum bad luck and the whole week is ruined.
A lot of people taking the wrong message away from this. He isn't saying avoid stops he's saying maybe wider with lower size is more profitable over time. If something dumps completely and you would have been out after a few % you'll lose a lot of your account without one
Excellent, I used to trade Without Stops and made Money because I came out when the market/trend told me it was changing. I started using stops and lost trade after trade which then reverted back to the direction I had chosen to trade. Frustrating is not the word 🤬🤬😡
Gold. Use stop loss for absolute worst case scenario and stay in control with your exits.... Extreme price fluctuations might take out your positions while market structure, context and idea is still valid. The trick is to keep risk small.
Biggest issue with stop loss is the false sense of security it gives. Most of the time if big crash happens, it will be on gaps at open where stops are useless. Best to manage position size and hedging.
This was exactly one of two points that changed my trading from disastrous to profitable. The other point was how to enter the trade. Now I enter in the area where I used to put my stops, and my stops are much wider, based on the point that a move in the market follows an increase in volatility. And I don't believe there is such a thing as stop hunting. There's low volatility before the move and then the volatility increases, so a stop based on the low volatility is almost bound to be taken out prior to the move you're looking for.
When i get in my car, I put my safety belt on, I do this just in case of an accident . I do not do this because I think there will be an accident, otherwise I would not get in my car. To me, stops should be used in the same way.
I see what you mean however the video also make sense. The point made was that you need to have a proper exit strategy. Also when you are driving, most of the times you wont rely on the safety belt to save you from injuring. That should be one of the last resorts.
Execpt for the fact that there is someone who is just waiting to ram you off the road and off a cliff to take you out of the game completely. Those culprits are banks that
Only put in a stop when walking away from the computer. Stops create a lot of slippage. Better to hit the bid on areas where you’re setup is invalidated. Besides that, market makers can see your stops. It’s like saying here this is my plan, take my money if you dare. And they often do.. Tight market stops and market stops in general are one of the main reasons i see traders not making money. Good vid👍🏼
actually trading a trend without a stoploss on low leverage is a great strategy that can make you a millionaire over time. The key is to withdraw from the account periodically so in a catastrofic event you will be left with the money in the bank. And another key is of course - know where the trend ends, but you will definitely feel it with your first losing position getting very big in loss.
Thhis explains exactly what’s been happening to me . It will touch the stop and continue my way but I have to pay more to hop back in the trade. I’ve since widened my stop range to be there only if a dramatic move takes place. Great video. Thanks
Been setting extra wide stops with judgement calls to close. Really made a big difference. I also ad a larger layer when the trade is deep against me when it looks very good for it. I then close my original enteries at just above break even. Ride the deeper entery or close all after break even with a decent profit. Appreciate your videos!!
I always have a stop...However my stops are account saving levels at 30% of the account not for the trade, the trade I close manually when I think it's time to cut my loss and get out.
By the way - you could put in a hedge in stead of a stop loss (if allowed in your country). This way you will still be in the trade and can get out whenever you are convinced of the direction of the trade. That is free - but require that you are present and ready to react when it is time to close one of the sides.
If you’re jumping from stock to stock to stock I feel stops are imperative because you are clueless as to the behaviors of those stocks (such as market maker manipulations). You’re framing trades purely on price action. However, if you stick to a few stocks then you’ll have a good idea of what’s happening next and may plan accordingly. So, perhaps the good advice may be : use stops until you feel comfortable trading a particular asset.
I trade like this, I'm the kind of guy who get annoyed when I get stopped out and then price goes my way! I can't handle the emotional pain, so I reduced my position size by 4 and have multiple entries, I will have a hedge Buy/Sell at the "I'm wrong level" and wait for price to correct or reverse, and try again..
Not setting stops only works for already winning traders, since they already know what they're doing and have discipline to get out. For newbs or losing traders, this will guarantee blowing many accounts and losing all your money quickly.
Lower the position size and widen the stop makes perfect sense , gives the trade room to breath while risking the same money amount. Just have to see the bigger picture of the trade
Trading without stop loss is just like gambling. Because you can never expect to win every trade but once you have the right strategy then you will have a winning edge over the market. Trading without stop is like slow poison because your going to blow your account.
USE STOPS....Just DON'T set them to tight, set them at a percentage..There is an art to using stops, but without them you can get wiped out or a huge loss can mess you right up in the head...USING stops is a must, LEARN how to set them properly..
I am 100% agreed. Trading is also an art. I found that almost 80% of my tradings were successful with a wider stop loss outside the price structure with Take Profit very much within the structure and not very keen on R:R of 1:2 or 1:1.5 but more on how much I can afford to loose on a particular trade and not to be so greedy on the profit unless for TP2 implementing a trailing stop (provided that it must always on the trend following and when the trend breaks, I will just exit with some losses without waiting my SL being hit). If I can afford the wider stop then I will not enter the trade. Money & Risk Management is mandatory but not implementing the usual formula of Risk to Reward ratio because many times they just do no hit the TP but instead reverse hitting the SL.
I noticed in the past before Esma. The majority of my trades were turned out correct and the wide stops allowed the trades to move. Now under these regulations it's harder to make a decent profit unless exposed for a longer time. The silly margin requirements and negative protection it really limits my flexibility with a small account. I've never used very high leverage but punished on tight margin. Out of touch regulators.
And finally. Thanks to Mark for daring to speak of this topic which most people are afraid of touching. Yes, if you trader guys don't know what you are doing (beginner or never catch the idea), then don't play with these ideas from Mark, but for the rest of us this is valid and we should think about it. Thanks Mark.
I enjoy your vids, but in this one, I think you really do miss the mark. Sure, stops are used to manage risk. But, what they're really used for is to manage EMOTIONS. And most people don't get that. Seems maybe you don't, either. What do stops really do? They DEFINE your risk. If you go into a trade knowing that you're risking a meaningless 1% (ya, ya, barring slippage and a gap), it's amazing how little you "care" about the trade. It's amazing how little stress is involved. I'll take a "touch and go (back up)" stop out any day for the piece of mind of being able to put a trade on and not giving a rip about it from then on. I was a stressed out average trader for years until I learned how to use a 1R:2R (2.2R, actually) set it and forget all or nothing trade strategy. It is DEADLY for the vast majority of traders to use "judgement" as you call it at the 8:00 mark. And the reason is simple--we are quite literally engineered by 2 million years of evolution to fail in the market. Anyone who doesn't get that needs to do a dive into behavioral finance. Here is a simple example--we are, BY NATURE, risk averse when it comes to gain (meaning we don't want to lose what we have), and risk taking when it comes to loss (meaning we will take risks to recapture something). This may have helped us avoid starving on the serengetti plains, as we lived with scarcity and made sure we kept and enjoyed what we captured before something, or someone came along and took it from us, and went after what we didn't have, or after what escaped. But, in the market, it translates into taking a quick profit to "protect it" or, the cardinal sin of trading, taking a risk and waiting for a loser to come back. It's the rare person who can thwart his human nature and win--which is why upwards of 90% of the very smart people who enter the arena end up losing. Think about that...it's a 50/50 game, really (stocks go up, or stocks go down), and yet the thrown around stat is that about 90% of people who ante up end up walking away losers. It's because you're up against human nature...exceptionally hard to override. Stops are a weapon in doing that. For most people, buying and winging it with a "if it starts to go down, and "obviously" isn't working out, I'm just going to get out" is deadly. Even having a mental stop of "X" is a fools folly in most cases. It's so damn easy for the game to deteriorate into "well, it hit "X," but look at that weak volume...I'm just going to see....aw man....it's moved lower still....well, when it moves to X again, I'll sell like I should have...." And away you go. Losses spiral, and you turn into a stressed out, emotional mess. No....for the vast majority, stops that may result in a "bad beat" are just a necessary part of the game. It is indescribable, the detatchment and emotional freedom, that comes from having the iron clad rule of "never make a decision inside a trade." That's what hard stops and targets have meant to me. Once a trade is put on, I never think about it, and I couldn't care LESS about it...win or lose. Because I know, from a sampling of over 2000 trades trading the same set ups, that I have a positive, statistically valid ME (mathematical edge)--something you can only really have with a hard R:xR) I would never in a million years go back to the shoot from the hip "I can beat my emotions in a Spock like way" buy and then try to manage my decsions while the emotions of human nature rage. The game really is a "simple" one...once the emotion has been stripped out. 50/50 trades with a meaningless 1% risked per trade with a 2R:1R bracket trade will make you rich. If you can play the gunslinger and shuck and jive, cooly getting in, getting out, you're a better man than I am. Maybe it comes down to that....knowing our strength and weaknesses. I just know, I'm too "weak" to trade without hard stops. I get your point about using a wider stop, too, but the trade off there is, if you're using an R:xR methodology, a bigger 1R means a harder target to hit (a bigger reversal needs to occur). For me, it's just a probability that the set up is indicating a greater likelihood (probability) of going up X, instead of down Y. The great thing? That probability requirement is 35% to break even long term, and 50% (a coin toss) for crushing returns. And, as "high probability" as I think my set up is, it is actually not much higher than a 50% win rate. A wider stop will negatively affect that probability. Anyway, thanks for the great content.
Stop loss hunting def exists. I use mental stops instead of a mechanical one. However for new traders, having 1 isnt a bad idea. If they're having trouble emotionally cutting losses
I think you said something that is very easy to overlook (3:12) ‘You are using a stop because you believe (think) the pattern is no longer valid.’ Unfortunately a stop is crude weapon that is not very good at judging when a pattern has ended. I can see the value in stops when capital is limited. At an extreme you do not want your account fall beneath a level. My preference is to use a separate exit indicator to the entrance indicator. Emergency stops make sense; the brokers I use require less margin when trades have stops attached.
I have never have used stops and never will I trade with the 'big boys mentality' as you call it, just on a smaller scale, I use my account balance to hold my position(s) and use small enough sizes that it can't touch me (to a large degree). I have held positions in negative 0000's for weeks before, only time I get losses is if I put to much in or i cut it out at the right time as it's just a small portion in which I can use the money taken for margin for other trades and in the grand scheme of things I make much more in the end. I trade with a 5 figure account been trading 5 years and has served me well.
I will use stop losses because I’m a noob. I swing trade. I see so many people holding their shares for a long period of time because they don’t wanna lose 20-30percent of their account, eventually they give up and sell for even a bigger loss. Would you rather lose 1-2 percent or 20-30? I don’t know, I’m gonna use stop losses because I can’t always stare at the charts and my position. Price goes up, I move my stop loss.
The other side of the coin is if you don’t have automatic stops you need to be “strong” enough to put in a stop to protect your equity. Closing a loosing trade take commitment, it’s always hard to admit you stuffed up, ask any woman.
I like where you’re coming from Mark, makes absolute sense. I think you’re spot on that experience is required to dynamically determine your exit points. Well done, another awesome clip💯👍🏼
I totally agree with wide stops and smaller positions. Why? Because very often you are right but the timing is a bit off (early) or you get taken out by market noise. Next to that, it prevents stop hunters from slaying you.
I have thought about this for a while. I am a relatively new trader. Paper traded for 4 years and have been trading with real money for the past 1 year. I keep a daily trading journal. As I look back on the journal, it is filled with complaints about being correct on direction but just being a little bit too early and what happens is I end up losing 2 -3 times in a row trying to ding the entry and by the time I get the entry correct, I end up just making all of my losses back and breaking even on that trade idea.
I think this is the best way to make profits in trading. I don't set stop loss but I set an opposite trade to freeze the situation, and I study situation after few hours or days...and when it's more convenient for me I close all positions of my account, because it's not important the single trade but the equity!
If you've back tested then you should have stats on where the best place to put your stop EG. 1.5 ATR or 2 ATR. I know too many people that have blown their whole account not using a stop and then praying it will reverse.
A few comments; 1. hedge if the price goes the wrong way X number of pips, 2. scale in and out in lot size. 3. exit condition instead of hard limits, 4. SL = Price +- N*ATR(20), N = number.
Well I trade high ATR stocks. Stops are essential to my trading strategy. I can’t risk no stops cause I don’t have the discipline to know when am wrong. By the time I admit my losses would be too huge. So in conclusion it depends on what you trade. If you are trading good stocks like AAPL then it will come back one day. But trading POS penny stocks then that is not smart.
Hard stops save lives! You have to earn the right to use mental stops....Market makers don’t care about your 100 shares on a $2.50 ticker...you can’t trade if you blow up. Live to trade another day.
I think instead of using stop losses in areas you are aware the price may go to (against you), you can just add to your position and reduce your loss or break even on your first move. Eventually the price will trace into the direction you initially thought, after that realizes just use a stop loss to secure some profit before it reverses against you again.
This is a tough subject and I struggled with it for some time. Now I mostly use stops well below my cost basis on my entire portfolio. If we have a major crash I will only lose roughly 20 percent of my entire portfolio. This is better than losing 50 percent or more. On my bigger winners I have my stops set above my cost. IMO the stop level should also be based on your age and time line. ( I also consider what level dip I want to buy that stock and the stop would be obviously lower than that assuming I'm already holding that stock )
I think it depends a lot on volatility. On volatile markets using stop you will lose most trades. The best thing is keeping an eye and later putting stop in break-even or closing manually. As he says, leverage should be low if you're not using stops (2:1 usually and 10:1 maximum?)
Trading reversals in forex is a great way to get stopped out. You become the low hanging fruit and you will be eaten. I will stick to trends on a daily chart thank you very much. Which is not to say I don't totally admire successful day traders.
Never put stop losses, privitise your risk assessment by watching your leverage ratio AND KEEPING THIS INFO TO YOURSELF - stop loss hunts happen all the time, I've seen multiple bear raids on stocks, with pathetic low volumes and large percentage points drop to drive the price down. Our data is being sold and manipulated. Make these investment banks, brokerage firms and prop traders work for their money. The greatest advantage retail traders have is TIME and a DAY JOB.
🧡💛💚💙 95% of traders will not respect their "mental stop". They will not cut early enough and they will average down. This is very dangerous advice. 🧡💛💚💙
The other day I was backtesting a strategy which was constant loser, even on paper. I accidentally removed the stop loss calculation and it became a winner. It was strange and I went over many times my calculations to verify if there is a mistake, there were none. Then I realised, I was suffocating my trades.
i program conditional stops with a custom timing eg closing below on 5min, 15min etc or what ever depending on the situation to avoid spikes. Then I also place backstop with plenty room. It takes a lot of clear mindedness to manage stop on the fly albeit you will have additional information... defiantly consider reducing trading size when using that strategy.
thats why I think stocks are easier. I just buy, hold without stop loss, the reason is because stocks won't ever hit zero, I can't imagine Apple or Google going to zero, so, I don't care if they are losing value, I keep buying. Forex does not work like that, if your position lowers too much, your margin is lowered and you can have your account closed for good.
I definitely appreciate this video. This is something I've observed of many professional traders who use wider stops in exchange for a higher win rate, with the risk of (hopefully) rare days with larger losses. I'll think about this approach.
Price is usually rangebound, using a TP instead of a stop is usually better, but with lower leverage, the problem is most traders won't even hold a trade longer than a few hours
I find that no stops help with intra day trading. if you are focusing on each trade you make. For example a break out or reversal turns out to be a fake or your not comfortable with the price action, why let it fade back to a stop, if you could terminate it there and then with a very small loss or even a small profit. Stops are useful if you want to place a trade and forget about it
One of the best video thank you that’s the way I trade most of the time when I place my stop I’m already in that trade & the market price is far away from it (obviously not in all cases called stop loss I call them take profit with loss 😉😉) please do more of these videos thanks again
A large stop that isn't where most other traders would put theirs is a good idea. As you said, have a calamity stop in place for safety but mental stops can work, they just need self discipline.
Stops are part of system accuracy. You get full accuracy without a stop. But you need it. So try to find a level where stop doesn't effect the accuracy. This is the reason why coin flip trading doesn't work. Possibility to hit 1$ stop is much greater than 2$ exit. Coin flip is 50/50. But with 1 to 2 risk to profit added the accuracy is like 1 out of ten. You hit 1$ stop 9x. And win ones 2$.
The other issue with a “hard” stop is it doesn’t allow you to ride a market dip which might mean the stock or index is sound while the market is tanking .
I personally believe that placing a order with a broker, then telling that same broker where to invalidate my trade (stop loss), knowing said broker thrives off of fees, spreads, (“liquidity”) is insane. If we are all looking at the same charts, there is nowhere to “hide” you stop loss, or place it where no one else is. You CAN delay it tho 💡I believe a stop loss should be entered on delay, once the trade is already on profit. You as the trader, should simply Have the build and wherewithal, to MANUALLY cut the trade when you see price action invalidating your thesis. I think adding a system-activated stop loss is a trader’s way of “turning their heads when things get bloody”. Calculate your entry, have confidence in your analysis and strategy, take the CALCULATED entry, allow price action to move freely a lil, and if price reaches your invalidation space, YOU make the conscious decision to cut the trade. You will get better at this decision making across time. It’ll inturn make you a monster of a trader.
I've been taught that not using stops is very bad and what I was doing is a bad strat.. But I got higher returns by not putting one. Well, now I've got to consider emergency stops. Thank you so much I appreciate this!!!
Grrat video and some great comments to I have experience swing trading option calls without stops etc When you day trade you are effectively taking small steps up a mountain or a floght of stairs but when you go in and out of each trade you leave the mountain or go up and down a single flight of stairs all day long every trading day etc eg one step down turn around and then 4 steps up etc and then turnaround and go back down 4 steps down turn around and go up one step etc and thats pretty much day ttading watching chart patterns etc But when you swing trade options you can be in a trade from 2 or 3 days to 2 or 3 weeks etc and you get to see every chart sequence etc but when the market goes sharp downward turn most traders stops will have exited the trade but most swing traders that dont use stops know that the downward turn usually comes straight back up again Most new traders when they see the stock price go down eg when first trying out swing trading for example eg leaving trades open overnight may see the first day they leave their trades open overnight and the market opens down -%50% for example most new traders may close their trades and accept the -50% loss etc and then start tying to buy new trades that they hope will recover the -50% they lost etc but experienced swing traders will stay in the trade and the next day the market may open another -30% down and new traders will usually close their trades and accept -80% loss etc but experienced traders will still stay in the trade And heres why Because if you trade as warren buffett calls them Wonderfull businesses They are usually big global brands which wont go bust and a trade in a big brand usually wont get close to -80% etc it ×ill only go down 2 or 3 market open gaps in a row before it starts to return to previous trading position price but if a swing trader sells a losing trade at first maket open down gap they have to day trade their losing trading balance back in to profit eg climbing the steps and if they sell their trades at the second or third consecutive market open down gap etc they could have lost 80% of their trading balance and have to day trade their trading balance from 20% of the balance to make up the 4x current balance which means they will have to at least double theie new low trading balance at least 2 or 3 times where as an experienced swing trader stays in the trade and waits patiently and efectively doesnt get out of the lift so to speak and the lift usually returns the -80% trading balance back in to profit over the next 1 or 2 market open up gaps When you understand this you trade with more confidence and patience and you should see beter returns on your trades if you hold trades for longer
So true, it is the same for me, I do swings and now I started using less capital per trade and make more trade. I take very few losses but will capture huge bull most of the time.
I've been considering this. For the times I'm still convinced the direction is correct, now I have guaranteed losses I'm dealing with on top of looking for another entry. Of course, there's no shortage of times I can think of in which I should have exited, earlier. Interesting points to think about. Thanks for the video.
Feel like you were talking directly to me with this one, the leverage is what makes people rely on stops souch because they're thinking about the money and not the setup or trade and how it's going according to their strategy maybe time of day ect. Fact of the matter is the leverage makes them panic thus having to use their stop to either keep whatever gains they've made or out of fear of detrimental damage , which couldve all been avoided by the reduction of leverage this giving them the space of mind to be able to judge whether it's the best decision that their making at the time, eg, could they have waited and left their stop wider ect. Food for thought.
Great video. I subbed. I wouldn't even advice to use that emergency stop loss - esp when trading Crypto - as 5 min crash glitches can happen and I've seen this many times that there was a dip of 80% that lasted less than 5 minutes... and why realize that loss? Position and margin sizing and limiting your exposure is the key in my opinion. As well as being able to properly analyze the market - is this a bull, bear, are we having a bull week, sideways week etc. And plan plan plan. Test test test. And use your own experience instead of setting arbitrary stops that will override your thinking with false sense of security.
Trade setup has hit an all-time bottom (and during this consolidation tight squeeze "HUNT FOR STOPS") You throw in what should be a no brainer Buy and place your stop where everyone else generally has. Once everyone's on the board price should go up, right? Around 40% the time it does, 60% the time they stop EVERYONE out before reversals. No coincidence. So place your stops diligently and trade like a contrarian and you'll probably improve your losses over time. They can't beat us all. ✌️🤗
If you're constantly getting stopped out prematurely before the move it means one thing, your entry signal sucks. There's no big conspiracy, there's no one out there looking and hunting for your stops. All the markets doing is going from liquidity to liquidity. Demand to supply. All you have to do is wait for a bigger player to come in and take it to the next area. How do you know theres bigger players? Volume. Traders like to enter because their TA told them to place a line on their chart and this is the place to get in but don't wait for the big money to confirm their thesis.
The whiteboard is so old school. Working on a computer with drawing tools would be so much better. His content is really good don’t get me wrong especially with his good personality and knowledge but I watched his Time and Sales video and you couldn’t reconcile it to what you see on a real time computer Time and Sales. Still hitting the subscribe.
I'm not that good. I use my judgement before entering the trade which is why I chose my stop. They're there to invalidate my assumptions. When I'm wrong, I want out as quickly as possible. When I'm right, my stops are irrelevant.
Problem is that stops are chased by the smart guys. They know where most people place the stops. So number one rule is: place your stops away from that area - give it more space. Yes it will cost more if you get stopped out, but you will gain profit when you are not stopped out with the rest of the traders.
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Pro tip: enter your position at the price where you would set your stop loss. Then put your stop loss below that which will invalidate your trade hypothesis. Also, ideally, the stop loss should be placed at a place, where market structure will be broken if price breaches that level. Market leans on a structure i.e. trend lines, ema/dynamic support resistance, fib levels, horizontal support resistance. Stop loss should be below the market structure where if it ever breaks, it is expected to go a lot lower . This way you can enter at a better cost basis later even though you might incur small loss bow.
I tested without a stop back in March. Scalping. I had days with maybe 80 % success and still I had days with 150 pips loss. The problem is that it only takes one trade without stop and maximum bad luck and the whole week is ruined.
A lot of people taking the wrong message away from this. He isn't saying avoid stops he's saying maybe wider with lower size is more profitable over time. If something dumps completely and you would have been out after a few % you'll lose a lot of your account without one
Excellent, I used to trade Without Stops and made Money because I came out when the market/trend told me it was changing. I started using stops and lost trade after trade which then reverted back to the direction I had chosen to trade. Frustrating is not the word 🤬🤬😡
Gold. Use stop loss for absolute worst case scenario and stay in control with your exits.... Extreme price fluctuations might take out your positions while market structure, context and idea is still valid. The trick is to keep risk small.
Biggest issue with stop loss is the false sense of security it gives. Most of the time if big crash happens, it will be on gaps at open where stops are useless. Best to manage position size and hedging.
This was exactly one of two points that changed my trading from disastrous to profitable. The other point was how to enter the trade. Now I enter in the area where I used to put my stops, and my stops are much wider, based on the point that a move in the market follows an increase in volatility.
And I don't believe there is such a thing as stop hunting. There's low volatility before the move and then the volatility increases, so a stop based on the low volatility is almost bound to be taken out prior to the move you're looking for.
I have traded without stops and blown up 8-9 times (real accounts). Still a beginner and trying learn and control my emotions.
When i get in my car, I put my safety belt on, I do this just in case of an accident . I do not do this because I think there will be an accident, otherwise I would not get in my car. To me, stops should be used in the same way.
good analogy but no..
Good advice if you want to lose money.
When I put on a seat belt, I give it some room so that it doesn't choke me to death. To me, stops should be used in the same way.
I see what you mean however the video also make sense. The point made was that you need to have a proper exit strategy. Also when you are driving, most of the times you wont rely on the safety belt to save you from injuring. That should be one of the last resorts.
Execpt for the fact that there is someone who is just waiting to ram you off the road and off a cliff to take you out of the game completely. Those culprits are banks that
I love stops. I just put them where my position gets 100% invalidated. They're super useful.
Only put in a stop when walking away from the computer. Stops create a lot of slippage. Better to hit the bid on areas where you’re setup is invalidated. Besides that, market makers can see your stops. It’s like saying here this is my plan, take my money if you dare. And they often do..
Tight market stops and market stops in general are one of the main reasons i see traders not making money. Good vid👍🏼
actually trading a trend without a stoploss on low leverage is a great strategy that can make you a millionaire over time. The key is to withdraw from the account periodically so in a catastrofic event you will be left with the money in the bank. And another key is of course - know where the trend ends, but you will definitely feel it with your first losing position getting very big in loss.
Thhis explains exactly what’s been happening to me . It will touch the stop and continue my way but I have to pay more to hop back in the trade. I’ve since widened my stop range to be there only if a dramatic move takes place. Great video. Thanks
Been setting extra wide stops with judgement calls to close. Really made a big difference. I also ad a larger layer when the trade is deep against me when it looks very good for it. I then close my original enteries at just above break even. Ride the deeper entery or close all after break even with a decent profit. Appreciate your videos!!
I always have a stop...However my stops are account saving levels at 30% of the account not for the trade, the trade I close manually when I think it's time to cut my loss and get out.
By the way - you could put in a hedge in stead of a stop loss (if allowed in your country). This way you will still be in the trade and can get out whenever you are convinced of the direction of the trade. That is free - but require that you are present and ready to react when it is time to close one of the sides.
Seeing this just now. I've been paper trading for three months, getting stopped out only to see price rose thereafter. Thanks for the validation.
If you’re jumping from stock to stock to stock I feel stops are imperative because you are clueless as to the behaviors of those stocks (such as market maker manipulations). You’re framing trades purely on price action. However, if you stick to a few stocks then you’ll have a good idea of what’s happening next and may plan accordingly.
So, perhaps the good advice may be : use stops until you feel comfortable trading a particular asset.
I trade like this, I'm the kind of guy who get annoyed when I get stopped out and then price goes my way! I can't handle the emotional pain, so I reduced my position size by 4 and have multiple entries, I will have a hedge Buy/Sell at the "I'm wrong level" and wait for price to correct or reverse, and try again..
Not setting stops only works for already winning traders, since they already know what they're doing and have discipline to get out. For newbs or losing traders, this will guarantee blowing many accounts and losing all your money quickly.
Lower the position size and widen the stop makes perfect sense , gives the trade room to breath while risking the same money amount. Just have to see the bigger picture of the trade
I agree , a stop can be hit right before it turns up. But yes a wide stop and a smaller size makes sense. That is what I DO.
Trading without stop loss is just like gambling. Because you can never expect to win every trade but once you have the right strategy then you will have a winning edge over the market. Trading without stop is like slow poison because your going to blow your account.
USE STOPS....Just DON'T set them to tight, set them at a percentage..There is an art to using stops, but without them you can get wiped out or a huge loss can mess you right up in the head...USING stops is a must, LEARN how to set them properly..
I am 100% agreed. Trading is also an art. I found that almost 80% of my tradings were successful with a wider stop loss outside the price structure with Take Profit very much within the structure and not very keen on R:R of 1:2 or 1:1.5 but more on how much I can afford to loose on a particular trade and not to be so greedy on the profit unless for TP2 implementing a trailing stop (provided that it must always on the trend following and when the trend breaks, I will just exit with some losses without waiting my SL being hit).
If I can afford the wider stop then I will not enter the trade. Money & Risk Management is mandatory but not implementing the usual formula of Risk to Reward ratio because many times they just do no hit the TP but instead reverse hitting the SL.
I’ll never use stop losses again!! I do better waiting until it comes back to breakeven or just giving time for the trade to work
I just finished watching his other video about how to place stops.
Stops have cost me alot of money indeed, I made a couple of EAs without stops that make good money
I noticed in the past before Esma. The majority of my trades were turned out correct and the wide stops allowed the trades to move. Now under these regulations it's harder to make a decent profit unless exposed for a longer time. The silly margin requirements and negative protection it really limits my flexibility with a small account. I've never used very high leverage but punished on tight margin.
Out of touch regulators.
And finally. Thanks to Mark for daring to speak of this topic which most people are afraid of touching. Yes, if you trader guys don't know what you are doing (beginner or never catch the idea), then don't play with these ideas from Mark, but for the rest of us this is valid and we should think about it. Thanks Mark.
Maybe the best thing to do is to .. stop putting too tight stops ? But I really figured out what you mean with that video, it's kinda tricky )
I enjoy your vids, but in this one, I think you really do miss the mark. Sure, stops are used to manage risk. But, what they're really used for is to manage EMOTIONS. And most people don't get that. Seems maybe you don't, either. What do stops really do? They DEFINE your risk. If you go into a trade knowing that you're risking a meaningless 1% (ya, ya, barring slippage and a gap), it's amazing how little you "care" about the trade. It's amazing how little stress is involved. I'll take a "touch and go (back up)" stop out any day for the piece of mind of being able to put a trade on and not giving a rip about it from then on. I was a stressed out average trader for years until I learned how to use a 1R:2R (2.2R, actually) set it and forget all or nothing trade strategy. It is DEADLY for the vast majority of traders to use "judgement" as you call it at the 8:00 mark. And the reason is simple--we are quite literally engineered by 2 million years of evolution to fail in the market. Anyone who doesn't get that needs to do a dive into behavioral finance. Here is a simple example--we are, BY NATURE, risk averse when it comes to gain (meaning we don't want to lose what we have), and risk taking when it comes to loss (meaning we will take risks to recapture something). This may have helped us avoid starving on the serengetti plains, as we lived with scarcity and made sure we kept and enjoyed what we captured before something, or someone came along and took it from us, and went after what we didn't have, or after what escaped. But, in the market, it translates into taking a quick profit to "protect it" or, the cardinal sin of trading, taking a risk and waiting for a loser to come back. It's the rare person who can thwart his human nature and win--which is why upwards of 90% of the very smart people who enter the arena end up losing. Think about that...it's a 50/50 game, really (stocks go up, or stocks go down), and yet the thrown around stat is that about 90% of people who ante up end up walking away losers. It's because you're up against human nature...exceptionally hard to override. Stops are a weapon in doing that. For most people, buying and winging it with a "if it starts to go down, and "obviously" isn't working out, I'm just going to get out" is deadly. Even having a mental stop of "X" is a fools folly in most cases. It's so damn easy for the game to deteriorate into "well, it hit "X," but look at that weak volume...I'm just going to see....aw man....it's moved lower still....well, when it moves to X again, I'll sell like I should have...." And away you go. Losses spiral, and you turn into a stressed out, emotional mess. No....for the vast majority, stops that may result in a "bad beat" are just a necessary part of the game. It is indescribable, the detatchment and emotional freedom, that comes from having the iron clad rule of "never make a decision inside a trade." That's what hard stops and targets have meant to me. Once a trade is put on, I never think about it, and I couldn't care LESS about it...win or lose. Because I know, from a sampling of over 2000 trades trading the same set ups, that I have a positive, statistically valid ME (mathematical edge)--something you can only really have with a hard R:xR) I would never in a million years go back to the shoot from the hip "I can beat my emotions in a Spock like way" buy and then try to manage my decsions while the emotions of human nature rage. The game really is a "simple" one...once the emotion has been stripped out. 50/50 trades with a meaningless 1% risked per trade with a 2R:1R bracket trade will make you rich. If you can play the gunslinger and shuck and jive, cooly getting in, getting out, you're a better man than I am. Maybe it comes down to that....knowing our strength and weaknesses. I just know, I'm too "weak" to trade without hard stops. I get your point about using a wider stop, too, but the trade off there is, if you're using an R:xR methodology, a bigger 1R means a harder target to hit (a bigger reversal needs to occur). For me, it's just a probability that the set up is indicating a greater likelihood (probability) of going up X, instead of down Y. The great thing? That probability requirement is 35% to break even long term, and 50% (a coin toss) for crushing returns. And, as "high probability" as I think my set up is, it is actually not much higher than a 50% win rate. A wider stop will negatively affect that probability. Anyway, thanks for the great content.
Market Makers lv stops because they hunt for SL and resell the shares they collected .
Stop loss hunting def exists. I use mental stops instead of a mechanical one. However for new traders, having 1 isnt a bad idea. If they're having trouble emotionally cutting losses
I would never consider that for day trading, for intra day yeah I can see your point
I think you said something that is very easy to overlook (3:12)
‘You are using a stop because you believe (think) the pattern is no longer valid.’
Unfortunately a stop is crude weapon that is not very good at judging when a pattern has ended.
I can see the value in stops when capital is limited. At an extreme you do not want your account fall beneath a level.
My preference is to use a separate exit indicator to the entrance indicator.
Emergency stops make sense; the brokers I use require less margin when trades have stops attached.
I have never have used stops and never will I trade with the 'big boys mentality' as you call it, just on a smaller scale, I use my account balance to hold my position(s) and use small enough sizes that it can't touch me (to a large degree). I have held positions in negative 0000's for weeks before, only time I get losses is if I put to much in or i cut it out at the right time as it's just a small portion in which I can use the money taken for margin for other trades and in the grand scheme of things I make much more in the end. I trade with a 5 figure account been trading 5 years and has served me well.
So true. I became consistently profitable on my swing trades after I removed my stop loss and started hedging and managing my position size.
I will use stop losses because I’m a noob. I swing trade. I see so many people holding their shares for a long period of time because they don’t wanna lose 20-30percent of their account, eventually they give up and sell for even a bigger loss. Would you rather lose 1-2 percent or 20-30?
I don’t know, I’m gonna use stop losses because I can’t always stare at the charts and my position. Price goes up, I move my stop loss.
The other side of the coin is if you don’t have automatic stops you need to be “strong” enough to put in a stop to protect your equity. Closing a loosing trade take commitment, it’s always hard to admit you stuffed up, ask any woman.
I like where you’re coming from Mark, makes absolute sense.
I think you’re spot on that experience is required to dynamically determine your exit points. Well done, another awesome clip💯👍🏼
I totally agree with wide stops and smaller positions. Why? Because very often you are right but the timing is a bit off (early) or you get taken out by market noise. Next to that, it prevents stop hunters from slaying you.
I have thought about this for a while. I am a relatively new trader. Paper traded for 4 years and have been trading with real money for the past 1 year. I keep a daily trading journal. As I look back on the journal, it is filled with complaints about being correct on direction but just being a little bit too early and what happens is I end up losing 2 -3 times in a row trying to ding the entry and by the time I get the entry correct, I end up just making all of my losses back and breaking even on that trade idea.
I think this is the best way to make profits in trading. I don't set stop loss but I set an opposite trade to freeze the situation, and I study situation after few hours or days...and when it's more convenient for me I close all positions of my account, because it's not important the single trade but the equity!
A lot of people have tight stops because of this risk to reward ratio nonsense. Just be concerned with the risk when placing a stop loss.
If you've back tested then you should have stats on where the best place to put your stop EG. 1.5 ATR or 2 ATR. I know too many people that have blown their whole account not using a stop and then praying it will reverse.
stop losses work, you want your gains to wipe out all your loses, you don't want your loss to wipe out all your gains
A few comments; 1. hedge if the price goes the wrong way X number of pips, 2. scale in and out in lot size. 3. exit condition instead of hard limits, 4. SL = Price +- N*ATR(20), N = number.
Great video. My backtesting also has found several 'losing' systems that become profitable once the stops are removed.
Well I trade high ATR stocks. Stops are essential to my trading strategy. I can’t risk no stops cause I don’t have the discipline to know when am wrong. By the time I admit my losses would be too huge. So in conclusion it depends on what you trade. If you are trading good stocks like AAPL then it will come back one day. But trading POS penny stocks then that is not smart.
Agree 100%. Been burnt too many times by being stopped out early. Manage your trade by watching your trade.
Hard stops save lives! You have to earn the right to use mental stops....Market makers don’t care about your 100 shares on a $2.50 ticker...you can’t trade if you blow up. Live to trade another day.
Good point, manual stops are almost always better if you have a clear strategy and discipline
I think instead of using stop losses in areas you are aware the price may go to (against you), you can just add to your position and reduce your loss or break even on your first move. Eventually the price will trace into the direction you initially thought, after that realizes just use a stop loss to secure some profit before it reverses against you again.
This is a tough subject and I struggled with it for some time.
Now I mostly use stops well below my cost basis on my entire portfolio. If we have a major crash I will only lose roughly 20 percent of my entire portfolio. This is better than losing 50 percent or more. On my bigger winners I have my stops set above my cost. IMO the stop level should also be based on your age and time line. ( I also consider what level dip I want to buy that stock and the stop would be obviously lower than that assuming I'm already holding that stock )
I think it depends a lot on volatility. On volatile markets using stop you will lose most trades. The best thing is keeping an eye and later putting stop in break-even or closing manually.
As he says, leverage should be low if you're not using stops (2:1 usually and 10:1 maximum?)
Trading reversals in forex is a great way to get stopped out. You become the low hanging fruit and you will be eaten. I will stick to trends on a daily chart thank you very much. Which is not to say I don't totally admire successful day traders.
Yes i agree with u, i think as for scalper, no need to use stop loss...
100% agree with this. Smaller positions, wider stops.
I would never consider this strategy ever. I mean we can’t be right all the time. Ups and downs are part of it. We can’t win it all.
Never put stop losses, privitise your risk assessment by watching your leverage ratio AND KEEPING THIS INFO TO YOURSELF - stop loss hunts happen all the time, I've seen multiple bear raids on stocks, with pathetic low volumes and large percentage points drop to drive the price down. Our data is being sold and manipulated. Make these investment banks, brokerage firms and prop traders work for their money. The greatest advantage retail traders have is TIME and a DAY JOB.
i trade with a wide stop loss 1,000 pips from my entry with a reduced lots size, if you are trading without a stop loss its like being at the casino.
I am in total agreement. Stops can be counterproductive, hindering the desired and profitable eventual outcome.
Excellent. Worth considering this out of the box thinking..
Thank you for your help. Regards.
I use stop losses as my stop order for me it makes my loss a complete minimal rather than putting a genuin stop loss
I'm back from my exams, to my favourite channel
🧡💛💚💙 95% of traders will not respect their "mental stop". They will not cut early enough and they will average down. This is very dangerous advice.
🧡💛💚💙
Excellent advice...reduce leverage and use wider stop.
The other day I was backtesting a strategy which was constant loser, even on paper. I accidentally removed the stop loss calculation and it became a winner. It was strange and I went over many times my calculations to verify if there is a mistake, there were none. Then I realised, I was suffocating my trades.
i program conditional stops with a custom timing eg closing below on 5min, 15min etc or what ever depending on the situation to avoid spikes. Then I also place backstop with plenty room. It takes a lot of clear mindedness to manage stop on the fly albeit you will have additional information... defiantly consider reducing trading size when using that strategy.
thats why I think stocks are easier. I just buy, hold without stop loss, the reason is because stocks won't ever hit zero, I can't imagine Apple or Google going to zero, so, I don't care if they are losing value, I keep buying.
Forex does not work like that, if your position lowers too much, your margin is lowered and you can have your account closed for good.
Definetly valid point, for me yes but not for all
I definitely appreciate this video. This is something I've observed of many professional traders who use wider stops in exchange for a higher win rate, with the risk of (hopefully) rare days with larger losses. I'll think about this approach.
Price is usually rangebound, using a TP instead of a stop is usually better, but with lower leverage, the problem is most traders won't even hold a trade longer than a few hours
I find that no stops help with intra day trading. if you are focusing on each trade you make. For example a break out or reversal turns out to be a fake or your not comfortable with the price action, why let it fade back to a stop, if you could terminate it there and then with a very small loss or even a small profit. Stops are useful if you want to place a trade and forget about it
One of the best video thank you that’s the way I trade most of the time when I place my stop I’m already in that trade & the market price is far away from it (obviously not in all cases called stop loss I call them take profit with loss 😉😉) please do more of these videos thanks again
A large stop that isn't where most other traders would put theirs is a good idea.
As you said, have a calamity stop in place for safety but mental stops can work, they just need self discipline.
I don't use stops at all on entries. I only use them after a trade is profitable. Position size is your friend.
Stops are part of system accuracy. You get full accuracy without a stop. But you need it. So try to find a level where stop doesn't effect the accuracy. This is the reason why coin flip trading doesn't work. Possibility to hit 1$ stop is much greater than 2$ exit. Coin flip is 50/50. But with 1 to 2 risk to profit added the accuracy is like 1 out of ten. You hit 1$ stop 9x. And win ones 2$.
Mmmhhh a wide SL means small size and it is difficult to find setups with a good rrr.
The other issue with a “hard” stop is it doesn’t allow you to ride a market dip which might mean the stock or index is sound while the market is tanking .
I personally believe that placing a order with a broker, then telling that same
broker where to invalidate my trade (stop loss), knowing said broker thrives off of fees, spreads, (“liquidity”) is insane. If we are all looking at the same charts, there is nowhere to “hide” you stop loss, or place it where no one else is. You CAN delay it tho 💡I believe a stop loss should be entered on delay, once the trade is already on profit. You as the trader, should simply
Have the build and wherewithal, to MANUALLY cut the trade when you see price action invalidating your thesis. I think adding a system-activated stop loss is a trader’s way of “turning their heads when things get bloody”.
Calculate your entry, have confidence in your analysis and strategy, take the CALCULATED entry, allow price action to move freely a lil, and if price reaches your invalidation space, YOU make the conscious decision to cut the trade. You will get better at this decision making across time. It’ll inturn make you a monster of a trader.
Loved the ideas that you said here. "Emergency stops" is a good term!
I've been taught that not using stops is very bad and what I was doing is a bad strat.. But I got higher returns by not putting one. Well, now I've got to consider emergency stops. Thank you so much I appreciate this!!!
If your day trading I agree stops do not work.
Grrat video and some great comments to
I have experience swing trading option calls without stops etc
When you day trade you are effectively taking small steps up a mountain or a floght of stairs but when you go in and out of each trade you leave the mountain or go up and down a single flight of stairs all day long every trading day etc eg one step down turn around and then 4 steps up etc and then turnaround and go back down 4 steps down turn around and go up one step etc and thats pretty much day ttading watching chart patterns etc
But when you swing trade options you can be in a trade from 2 or 3 days to 2 or 3 weeks etc and you get to see every chart sequence etc but when the market goes sharp downward turn most traders stops will have exited the trade but most swing traders that dont use stops know that the downward turn usually comes straight back up again
Most new traders when they see the stock price go down eg when first trying out swing trading for example eg leaving trades open overnight may see the first day they leave their trades open overnight and the market opens down -%50% for example most new traders may close their trades and accept the -50% loss etc and then start tying to buy new trades that they hope will recover the -50% they lost etc but experienced swing traders will stay in the trade and the next day the market may open another -30% down and new traders will usually close their trades and accept -80% loss etc but experienced traders will still stay in the trade
And heres why
Because if you trade as warren buffett calls them
Wonderfull businesses
They are usually big global brands which wont go bust and a trade in a big brand usually wont get close to -80% etc it ×ill only go down 2 or 3 market open gaps in a row before it starts to return to previous trading position price but if a swing trader sells a losing trade at first maket open down gap they have to day trade their losing trading balance back in to profit eg climbing the steps and if they sell their trades at the second or third consecutive market open down gap etc they could have lost 80% of their trading balance and have to day trade their trading balance from 20% of the balance to make up the 4x current balance which means they will have to at least double theie new low trading balance at least 2 or 3 times where as an experienced swing trader stays in the trade and waits patiently and efectively doesnt get out of the lift so to speak and the lift usually returns the -80% trading balance back in to profit over the next 1 or 2 market open up gaps
When you understand this you trade with more confidence and patience and you should see beter returns on your trades if you hold trades for longer
So true, it is the same for me, I do swings and now I started using less capital per trade and make more trade. I take very few losses but will capture huge bull most of the time.
I've been considering this. For the times I'm still convinced the direction is correct, now I have guaranteed losses I'm dealing with on top of looking for another entry. Of course, there's no shortage of times I can think of in which I should have exited, earlier.
Interesting points to think about. Thanks for the video.
I always will use stop loss. No exceptions. Will never risk blowing my account.
This is an excellent video concerning setting stops.
Thank you and keep up the good work.
So this is really called "The Intelligent & Flexible Use of Stops"? Excellent points on this video!
One of the great parts of trading options instead.
Feel like you were talking directly to me with this one, the leverage is what makes people rely on stops souch because they're thinking about the money and not the setup or trade and how it's going according to their strategy maybe time of day ect. Fact of the matter is the leverage makes them panic thus having to use their stop to either keep whatever gains they've made or out of fear of detrimental damage , which couldve all been avoided by the reduction of leverage this giving them the space of mind to be able to judge whether it's the best decision that their making at the time, eg, could they have waited and left their stop wider ect. Food for thought.
Great video. I subbed. I wouldn't even advice to use that emergency stop loss - esp when trading Crypto - as 5 min crash glitches can happen and I've seen this many times that there was a dip of 80% that lasted less than 5 minutes... and why realize that loss? Position and margin sizing and limiting your exposure is the key in my opinion. As well as being able to properly analyze the market - is this a bull, bear, are we having a bull week, sideways week etc. And plan plan plan. Test test test. And use your own experience instead of setting arbitrary stops that will override your thinking with false sense of security.
Trade setup has hit an all-time bottom (and during this consolidation tight squeeze "HUNT FOR STOPS") You throw in what should be a no brainer Buy and place your stop where everyone else generally has. Once everyone's on the board price should go up, right?
Around 40% the time it does, 60% the time they stop EVERYONE out before reversals. No coincidence. So place your stops diligently and trade like a contrarian and you'll probably improve your losses over time. They can't beat us all. ✌️🤗
Do you think the same when managing risk scalping weekly options in a volatile market?
If you're constantly getting stopped out prematurely before the move it means one thing, your entry signal sucks.
There's no big conspiracy, there's no one out there looking and hunting for your stops. All the markets doing is going from liquidity to liquidity. Demand to supply. All you have to do is wait for a bigger player to come in and take it to the next area.
How do you know theres bigger players? Volume. Traders like to enter because their TA told them to place a line on their chart and this is the place to get in but don't wait for the big money to confirm their thesis.
The whiteboard is so old school. Working on a computer with drawing tools would be so much better. His content is really good don’t get me wrong especially with his good personality and knowledge but I watched his Time and Sales video and you couldn’t reconcile it to what you see on a real time computer Time and Sales. Still hitting the subscribe.
thanks for the feedback.
Sometimes old skool is best you don’t need loads of techno Mumbo jumbo and ten screens to explain principles. I like the board 👌🏼
I'm not that good. I use my judgement before entering the trade which is why I chose my stop. They're there to invalidate my assumptions. When I'm wrong, I want out as quickly as possible. When I'm right, my stops are irrelevant.
Problem is that stops are chased by the smart guys. They know where most people place the stops. So number one rule is: place your stops away from that area - give it more space. Yes it will cost more if you get stopped out, but you will gain profit when you are not stopped out with the rest of the traders.