Why don't traders put stops at all? Two common cases

Why don't traders put stops at all? Two common cases Visitors: 531 ★★★★★


The situation with this issue is really difficult.

To begin with - why don't they put stops at all? This happens in two cases:

The first - when the stop just do not know how to put. In this case, almost every transaction ends with a stop. Most often, the problem is that it is just small and the market is blowing it. Less commonly, the problem is in analysis. But in any case, a person just gets tired of the fact that he constantly receives small losses. And instead of looking for errors, the stop does not.

The second case is related to psychology. Even a correctly set stop, and worked correctly (protecting the deposit from a big loss), leads to the fact that the trader is sorry for the lost money. He believes that it is possible to optimize trade so that stops, become, are not needed.

And here there may be various solutions to the problem - locking, staying all the way, and manual closing of the transaction.


To begin, consider locking, as the easiest option to calculate. A pending order for a lock, or placed manually, is an analogue of a stop. And the risk here is approximately equal to what would be with the stop. We multiply the cost of a point by the number of points, express this amount as a percentage of the deposit and get the percentage of risk. The downside of this approach is that you will ever have to unlock it. And not necessarily this will lead to an acceptable way out of the situation. And, depending on the specific DC, part of the margin will be frozen in the account, leading to a decrease in available funds.


Staying all the way. This is the worst option, here we can assess the risk as equal to 100 percent, in the vast majority of cases. Since trading is almost always carried out using leverage, and with the funds involved in the trade exceeding the deposit (lottery), this approach periodically leads to a drain. The smaller the supply in points, the more often the drain. The exception is only those cases when the trade goes without leverage, or with a very small leverage, up to 1 to 3 - 1 to 4. It is unlikely that the currency in relation to the second will lose 25-30 percent of the value, although this is not excluded.


Manual closing of an order. A plus of this is the fact that constantly monitoring, a trader can benefit from the moment when a closed stop will minimize loss, or even no loss. We all know that the market often rolls back. But at the same time, it can be argued that this does not always happen. And thus, on the contrary, you can get a loss more than it would be by using a stop. There is such a moment here that you can simply be distracted, and this approach is most often used by scalpers and intraday traders, and distraction for just a couple of minutes can lead to very serious losses. After all, lots here are often large. What would I say? There are probably no risk assessment methods here.


A similar approach to fixing risk is a very gray horse. Reasonable risk assessment methods for such trading - I do not see. Everything is very individual and depends on many quantities.


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