iCharts Discussions

[taruj]

NO NEED for a STOP LOSS order!!!

Why do we even need a stop loss?

Think about it for long and think hard and ask your self, can such a thing exist? Is it even possible!! No more losses, and only profits....

Let's examine some thing from the market's perspective and yours. Ask yourself what is a profitible trade?

If you buy something at a certain price and sell it at a higher price you make money. That's it... You bought Nifty Futures (NF) at 5500 and sold at 5510, you made a profit. The market (partcipants) didn't know you bought at 5500. So no one knew when you closed your trade, no one told you a thing, you don't know who you sold your position to. You know you made a proft.

Lets break this down a bit...
You bought NF at 5500 [1 Lot], at the the very next moment (trade) there are three things that can happen;
the price can be heigher than your buy price,
the price can remain at the same level as your buy price,
the price can be lower than your buy price.

If the price is higher than what you bought at or at the same level as you buy price -- NO Problem.

If the price is lower than what you bought at. -- PROBLEM.
down by 1 point - loss of Rs. 50 - down by 25 points - loss of Rs. 1250 - down by 50 points - loss of Rs. 2500 you get the idea.

When you bought the NF did you know with a 100 % certainty that the price will go higher? How can you be a 100% sure THIS trade is going to give you profit?

It could be that you have a set of indicators (and rules) that tell you that it's a good time to buy, but sure as day and night you DON'T KNOW at what level is the price going to be. You can have the best method in place, with all the xMA, Stoch, MACD, Fibbo & GANN etc. in your toolbox and you might have the best analysis in the world which might have worked in the past, you dont know the Future.

That's just it, You CANNOT know what is going to happen in the next tic, minute, 30 Minutes, 1 Hour, 1 day...

I just hope that you have really understood that if you have an open position and dont have a stop loss in place, you better have gypsy Crystal Ball that tells you the Future.

Best Regards,

[pkholla]

I would like to add 3 comments to the excellent post by taruj
1) We should be careful while placing SL because many over smart operators deliberately hammer the price, trigger the Stops placed and then take the scrip up. (Particularly in Nifty FnO)
Eg, we buy 5900 call at Rs 51, place stop at 45 and sit back and watch with horror as the price gradually creeps down to 44 and then zooms to 69! Even when there is Rs 18 profit , we have lost Rs 6 +brokerage!
2) Alternatively, we should consider placing PRICE ALERT. this is a very useful thing esp as no buy or sell is triggered by price crossing it! it remains valid next day also (or further) if not triggered.
3) Nowadays, I buy cash scrips on positional basis and place PA, as suitable, some Rs 20,30,40 above. The PA may even be trigd next month. It doesnt need our constant monitoring! (I dont place PA below purchase price as the scrips I purchase are near bottom and will eventually shoot up!)
Prakash Holla

[umesh1]

Hi All
1) No trader has got bust by hitting stoploss,but certainly those who didnt use stoploss have
2)every strategy or method which gives entry signal also gives a stoploss and target,after executing entry trade the next order that should go is stoploss and then the target
3)stoploss is not be measured by value(of loss) wise but price at which the system asks u to exit,means never take entries much far from the entry given by system,which will make your stoploss also far,if missed an entry ,dont rush,wait for another this is the only place where opportunities never get over(believe it)
4)if stoploss is hit consecutively,stop trading evaluate your strategy,or give it another chance as it could be a whipsaw effect
5)record your trades by giving reasons for entry and stoploss,i learnt it a difficult way(i know not easy as said),
6)learn to sit idle and watch and play(take entry) when your(signal asks) turn comes
7)successful traders dont chase the indices/ stocks or prices as they have already decided what and when to trade
8)start with a(rubber ball) small in equity,develop a habit of winning before you play with a seasoned
Cheering every tgt will boost your winning

[taruj]

THANK YOU pkholla & umesh. Really appreciate your guidance.

umesh you mentioned:
"stoploss is not be measured by value(of loss) wise but price at which the system asks u to exit,means never take entries much far from the entry given by system,which will make your stoploss also far,if missed an entry ,dont rush,wait for another this is the only place where opportunities never get over(believe it)" --- when people read it, the underlying idea seems so obvious but is really a very important concept that most people misinterpret. took me a long time to understand this.


Best Regards,

[pkholla]

Umesh: Thnx for excellent advice. Worth reading again and again. Prakash Holla

[sairanga19]

for intraday placing stoploss is must but for swings u need some option mechanism to protect your overnight risk, anything can happen in market.

[taruj]

This is a baad advice for newbies (like me). But still...

If you are not able to figure out a technical stop (based on some method) keep a value based SL, atleast this way you will be able to stay in the game longer, which may help you in getting profits in the longer term...

baseline - YOU need the Dam'n Stoploss in the system/platform.

regards,

[Exness Official]

As the other members have already said, trading without a stoploss is by far the fastest way to blow an account. At the end of the day, leverage is neither a good nor bad thing! It enables you to take trades and make more money than you could without it, but it also enables you to lose more money faster.

Yes, having a stoploss does sometimes knock you out of the trade that would soon have turned around and went in the direction you hoped it to go, but the reason we use stoplosses is simple: if a price hits our stoploss, we know our setup, or reasoning for entering that specific trade, is invalid. Stoplosses are critical to trading. There is no such thing as a professional trader who doesn't use at least a mental stoploss.

When my Broker Exness started providing educational videos they always made emphasize on putting a stop loss in trading