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What % is your daily loss limit?


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What % is your daily loss limit?

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  #11 (permalink)
Bangor, Wales
 
 
Posts: 16 since Sep 2015
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Sandpaddict View Post
I dont have a daily dollar limit but after two bad trades in a row, not necessarily losses, just bad trades, I step back and reassess.

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I like your thinking here - it's about poor trading, and what you need to do psychologically to address that and get back in sync with the market - rather than having an arbitrary dollar limit for losses. That makes a lot of sense.

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  #12 (permalink)
Houston, Texas
 
 
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2% but primarily it is a mindset. Knowing I have a limit helps me keep from revenge trading.

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  #13 (permalink)
Langley
 
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DavidCarmichael View Post
I like your thinking here - it's about poor trading, and what you need to do psychologically to address that and get back in sync with the market - rather than having an arbitrary dollar limit for losses. That makes a lot of sense.

Yes DavidCarmichael thats exactly it. Sounds more clear when you say it. I don't know if its a good strategy. I don't even know why I do but after just so many of those over the years I know thats when I go on tilt. Then you let one of those oversized losses get thrown in there and there goes your day... or worse!

Thanks for the reply!

Good trading to you!

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  #14 (permalink)
Singapore
 
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Sandpaddict View Post
Yes DavidCarmichael thats exactly it. Sounds more clear when you say it. I don't know if its a good strategy. I don't even know why I do but after just so many of those over the years I know thats when I go on tilt. Then you let one of those oversized losses get thrown in there and there goes your day... or worse!

Thanks for the reply!

Good trading to you!

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however, wouldn't 1 big loss of wiping quite abit of your account provide more damage than fixed manageble loss?

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  #15 (permalink)
Kyiv Ukraine
 
 
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eilanzier View Post
I have more question, do you guys trail your stop or just put a stop and go away?

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This was actually the cornerstone that my trading system lacked long enough to make me desperate at some point. The system didn't work with a consisten enough profit until I formalized the rules of trailing the stop to BE.
In most cases not trailing at all is the best decision. Trailing to break-even given the total 1:10 risk:reward of the trade is a good idea though. Yet, not earlier than the price has moved far enough from the entry point.

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  #16 (permalink)
Langley
 
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eilanzier View Post
however, wouldn't 1 big loss of wiping quite abit of your account provide more damage than fixed manageble loss?

Yes. If I understand what your saying.

My point being Ive found if a make a few bad trades in a row, again they dont have to be losers to be bad trades, but after a couple of bad trades its just easier doing something stupid that leads to that one big loss.

And that one big loss is either the end or the beging of the end because it never should have happened in the first place... but were all human so we have to account for our tendencies.

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  #17 (permalink)
Langley
 
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eilanzier View Post
I have more question, do you guys trail your stop or just put a stop and go away?

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Hello again eilanzier.

I can only speak for myself and my experiences but heres my take.

Trailing stops sounds so easy, so logical, but they can fool you into complacency into you crunch the numbers.

For me when I back tested trailing stops the only time they ever out performed other kinds of stops was during strong moves up or down and if you think about it its still suboptimal because in a strong trend your stop wouldn't be hit anyway and once it slows down a bit itll come back take you out and probably resume without you.

Does that mean I dont like or dont use trailing stops?... NO. I do. But more price action and when I know either the markets in my profit zone or if its just gone to far too fast ect... but never just a percentage or dollars trailing.

Hope that helps.

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  #18 (permalink)
Singapore Singapore
 
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I feel trailing stops needs more mental tenacity, because I presume your strategy is riding the trend. So you will be stopped out at loss or breakeven more often than being able to ride the trend. And the trend must be strong enough to cover all your small losses and commissions.

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  #19 (permalink)
Toronto Canada
 
 
Posts: 24 since May 2020
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Sandpaddict View Post
Hello again eilanzier.

For me when I back tested trailing stops the only time they ever out performed other kinds of stops was during strong moves up or down and if you think about it its still suboptimal because in a strong trend your stop wouldn't be hit anyway and once it slows down a bit itll come back take you out and probably resume without you.

Does that mean I dont like or dont use trailing stops?... NO. I do. But more price action and when I know either the markets in my profit zone or if its just gone to far too fast ect... but never just a percentage or dollars trailing.

Hope that helps.

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I found the same tendencies in everything I backtested (scalping type system). I wrote many different stop systems and by far, the trailing stop method, always gave much worse results. The concept sounds good in theory but in practice the market is so full of noise you end up getting whipped out. What I did find improved results substantially was to bring the profit target in, in relation to the amount of maximum adverse excursion in each trade.

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  #20 (permalink)
Langley
 
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RT777 View Post
I found the same tendencies in everything I backtested (scalping type system). I wrote many different stop systems and by far, the trailing stop method, always gave much worse results. The concept sounds good in theory but in practice the market is so full of noise you end up getting whipped out. What I did find improved results substantially was to bring the profit target in, in relation to the amount of maximum adverse excursion in each trade.

Thats its exactly what Ive found RT777. Exactly! Bring my targets inside MFE has far out performed trailing stops. I think its in part of us to try to squeeze every last tick to help us but in reality theres ALWAYS more room you could have exited above a trailing stop anyway again if you think about it.

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