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What % is your daily loss limit?


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What % is your daily loss limit?

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  #21 (permalink)
Toronto Canada
 
 
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Sandpaddict View Post
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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I don't know if there is something empirical about it, some type of mean reversion process is happening? I also think it gets worse the tighter the scalping system you attempt to use, which is why I thought it was relevant to this thread. I've tested a dozen different futures contracts on over 10 years of intraday data and they all exhibit the same characteristic.

It's interesting you have found the same tendency, it goes against the grain in all chat rooms I have ever been a part of. In the past when I've suggested trailing stops are not optimal, I usually get in trouble LOL.

It may be possible on larger timeframes or swing type trades the behavior is different, but I have not explored that in any detail.

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  #22 (permalink)
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5% for me on any one day and 3 losing days in a row or 12% for a week.

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  #23 (permalink)
Singapore
 
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Actually I asked the question is due to thr fact that, my trade typically targets around 100 ticks.

I find it rather difficult see my trade reaching 98 ticks while I shift to break even and the trade retrace to my break even point end up I get out of thr trade with 1 tick when I could clokc maybe 80 to 90 ticks.


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  #24 (permalink)
Langley
 
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Wow absolutely eilanzier! You should not let that happen.

Im not sure exactly what I said above but it does apply. I don't trail percentage or dollars but I DO USE PRICE ACTION and/or when my target GETS IN ITS ZONE.

If you are going for 100 ticks maybe start ratcheting up where if it went below this you just dont want to be in this trade anyway price action wise which might take awhile.

Then define your zone... if it gets to 80 Ill do this... 90 Ill do this...

Then pay very careful attention as it passes... 80 ticks... 90 ticks... 80 ticks... 75 ticks... OH NOO.... this is where it gets tricky and I dont like trailing stops so my advice is hold out for that 100 ticks or manage a better exit than what your trialing stop would have been and I think you'll do better.



As always just my 2 cents.

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  #25 (permalink)
Langley
 
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RT777 View Post
I don't know if there is something empirical about it, some type of mean reversion process is happening? I also think it gets worse the tighter the scalping system you attempt to use, which is why I thought it was relevant to this thread. I've tested a dozen different futures contracts on over 10 years of intraday data and they all exhibit the same characteristic.

It's interesting you have found the same tendency, it goes against the grain in all chat rooms I have ever been a part of. In the past when I've suggested trailing stops are not optimal, I usually get in trouble LOL.

It may be possible on larger timeframes or swing type trades the behavior is different, but I have not explored that in any detail.

Yes I forget to mention alot that "in my trading style" which I consider a form of scalping.

But this is also partly why I started my LIVE in the markets trading journal. People give the worst advice and have no idea. I spent years trying to fit MY trading to the GENERAL RULES OF TRADING!

Win loose or draw. (There wont be a draw lol) I absolutely might blow out but Im out to prove all you need is a truly profitable system and other than that everyone else can pound sand.

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  #26 (permalink)
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MrGreen1 View Post
I read a lot about how people donít recommend risking more than 1% of their account per trade, but what is your total daily loss limit?

If you follow the 1% rule, how many losing trades in a row until you call it a day? Would 2-3 losing trades in a row (2-3% of your account if risking 1%) be enough? What are your daily risk parameters?


Sandpaddict View Post
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.


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.

This has become a good discussion of stop strategy, especially trailing vs. fixed stops, but also has gotten a little off-topic from the original question, which was about your daily loss limit percent.

I do like the trailing/fixed stop question though, so let me add a little more to it, before trying to steer things back more in the original direction.

It has been noted that trailing stops work if you are in a large trend, because it's large, basically -- you want to just ride it and not get out "early." It's also been noted that trailing stops are terrible in mean reversion situations, and that a fixed target will do better there.

I don't think anyone has pointed out explicitly yet that markets tend to be in mean reversion (ranging) mode much of the time, although it's part of what a lot of people have said. The question is therefore whether you can detect a trending vs. a non-trending situation, or adapt your trading to the mode the market is operating in. Taking a profit quickly will work much better if the market moves in shorter runs and then falls back. Holding during a trend with a trailing stop works well, but only if it is a trend, and if you don't use your trailing stop during short-up-and-down moves where you get whipsawed to death.

So all you have to do is know the future, right? Hard to do.

I think this question is a larger one than what this thread started out with: rather than just "what is your percent loss number," now it's "how to respond to current market conditions to manage loss." But that's the larger context for any loss-limiting or risk-limiting discussion.

Maybe we can move the conversation back in the direction of the original topic anyway, because it's a good question that traders need to have some clarity on.

Perhaps something explicitly related to how loss parameters have worked out over time, or under different conditions, or something else that brings risk criteria back in....

Not trying to stifle this discussion, though, just reminding people of the topic.

Bob.

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  #27 (permalink)
Singapore
 
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I actually did 2 trade today intending to adopt either win or lose mentality.

Today I did 1 trade which hit 87 ticks profit but I did not move my stop, end up losing the trade, felt a little upset though.

2nd trade
I entered a trade without fulfilling my rule it is quite far away from where I intended to enter. I didn't have a chance to get out of thr trade and got a straight loss.

3rd trade (paper)
After reading your response
I entered the place where I originally intended to enter on second trade and move my stop loss based on price level (I also have atr set up for moving stop loss though hardly use but might take a look in future)

Anyway aside from moving to the price level, I never move stop loss further, end up earning 143 ticks peofit. My target is usually a previous zone

I think I felt rather devastated when I see a trade which I couldn't have lost turn into a loser. But in order to achieve consistency, better way is not to move my stop at all. Any how I will update the thread regularly.
Sandpaddict View Post
Wow absolutely eilanzier! You should not let that happen.

Im not sure exactly what I said above but it does apply. I don't trail percentage or dollars but I DO USE PRICE ACTION and/or when my target GETS IN ITS ZONE.

If you are going for 100 ticks maybe start ratcheting up where if it went below this you just dont want to be in this trade anyway price action wise which might take awhile.

Then define your zone... if it gets to 80 Ill do this... 90 Ill do this...

Then pay very careful attention as it passes... 80 ticks... 90 ticks... 80 ticks... 75 ticks... OH NOO.... this is where it gets tricky and I dont like trailing stops so my advice is hold out for that 100 ticks or manage a better exit than what your trialing stop would have been and I think you'll do better.



As always just my 2 cents.

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Sent using the futures.io mobile app

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  #28 (permalink)
Singapore
 
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Hey Bob, apologies for shifting the thread direction
bobwest View Post
This has become a good discussion of stop strategy, especially trailing vs. fixed stops, but also has gotten a little off-topic from the original question, which was about your daily loss limit percent.

I do like the trailing/fixed stop question though, so let me add a little more to it, before trying to steer things back more in the original direction.

It has been noted that trailing stops work if you are in a large trend, because it's large, basically -- you want to just ride it and not get out "early." It's also been noted that trailing stops are terrible in mean reversion situations, and that a fixed target will do better there.

I don't think anyone has pointed out explicitly yet that markets tend to be in mean reversion (ranging) mode much of the time, although it's part of what a lot of people have said. The question is therefore whether you can detect a trending vs. a non-trending situation, or adapt your trading to the mode the market is operating in. Taking a profit quickly will work much better if the market moves in shorter runs and then falls back. Holding during a trend with a trailing stop works well, but only if it is a trend, and if you don't use your trailing stop during short-up-and-down moves where you get whipsawed to death.

So all you have to do is know the future, right? Hard to do.

I think this question is a larger one than what this thread started out with: rather than just "what is your percent loss number," now it's "how to respond to current market conditions to manage loss." But that's the larger context for any loss-limiting or risk-limiting discussion.

Maybe we can move the conversation back in the direction of the original topic anyway, because it's a good question that traders need to have some clarity on.

Perhaps something explicitly related to how loss parameters have worked out over time, or under different conditions, or something else that brings risk criteria back in....

Not trying to stifle this discussion, though, just reminding people of the topic.

Bob.

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  #29 (permalink)
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eilanzier View Post
Hey Bob, apologies for shifting the thread direction

Not a problem. This is what threads do, and sometimes wandering around a little gets them to interesting places, which it did.




eilanzier View Post
But in order to achieve consistency, better way is not to move my stop at all. Any how I will update the thread regularly.

But if you're going to update the thread with trade reports, it's much better to start a trade journal where you can address them in detail and where they will be on-topic. Discussion of individual trades should be done there.

Bob.

When one door closes, another opens.
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  #30 (permalink)
Celebration, FL
 
 
Posts: 1 since Sep 2010
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When you guys say that you have backtested trailing stops and found them to be suboptimal, are you referring to mechanical trailing stops? In other words, a certain percentage retracement or perhaps ATR-based? What about placing the trailing stops above/below previous pivot highs/lows?

Sorry. Just now saw the posts about the hijacking of the thread.

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June 1, 2020


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