Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

analyst75

The major reason why suicide traders don’t want to use stop loss – part 2

Recommended Posts

TIMELY EXIT

 

 

“Successful Trading Is Not About Being Right.” – VTI

 

What is your tolerance for pain? Consider the following scenario. You have 10% of your account balance on the line. For the past two days, prices have been going in the direction you had anticipated, but today, an announcement was made that caused a market move that caused all your profits to be wiped out in an hour. What will you do? See if prices will move back to where you are okay again? At times like these, it is useful to have a clearly defined trading plan with a specific exit strategy.

 

Trading is inherently uncertain. You never know exactly what will happen next. That’s what makes the business exciting to some traders but nerve wracking to others. How you handle adverse events that make prices move against you depends on your personality. The best way to protect your capital is to use protective stops. When formulating your trading plan, you must decide how much pain you can tolerate. How much money can you lose before you have to exit the trade? You can set this exit point as a formal stop loss, you can use the automatic settings on your trading platform to set a stop, or you can use a mental stop (not recommended).

 

The problem with a formal stop loss procedure, whether it is a formal order or an automatic setting on your trading platform, is that a transitory change in price can ‘stop you out.’ if the placement of your stop loss does not adequately account for volatility. It’s hard to know how far a stock may move and a temporary drop can ruin your trading plan when a protective stop is not set properly. Mental stops may be more useful, but you run the risk of not being able to exercise your mental stop (think heart attack, nervous breakdown, stroke, personal emergency, computer failure, etc.). You can decide how far a stock price must move against you before you will liquidate the position. When prices reach the exit point, you can decide whether the low price is transitory or represents a significant change in trend. You can then exit the trade.

 

This all sounds good in theory, but depending on your personality, you may not be able to carry out this strategy. If you have trouble controlling your emotions and you use a mental stop, for example, you may have trouble closing the trade when it reaches your exit point. Some people panic and out of fear don’t close their position when their mental stop is reached. These people may need to impose the proper amount of discipline on their trading actions by using an electronic stop or a formal stop-loss order.

 

Minimizing trading losses is the hallmark of successful trading, but not all traders are equal when it comes to their ability to trade decisively under strain. If you want to trade profitably, you have to work around your personality. If you are cool headed, disciplined, and are willing to take the risk even under the most stressful conditions, you can use mental stops to protect your capital. But if you are easily shaken by choppy market action, you might want to use electronic, automatic stops to protect yourself. Whatever you do, however, minimize losses as much as possible. It’s the only way to trade profitably in the long run.

 

 

Author: Joe Ross

 

Source https://www.tradingeducators.com/edition-733 

 

The article is ended with 3 quotes below:

 

“Getting out of trades too early with tiny profits very often is a sure road to bankruptcy. Sure it feels good to take some off the table right away…but it’s hardly ever successful in the long run.” - Marco Mayer 

 

“To make money out of these still requires good management. It is always challenging to see some traders make money from a trade while some traders lose money from the very same trade.” – Joe Ross

 

“Don’t let those losses lead to mindset traps that can stop you from taking the next trade. Change the way you think about your loss, and you’ll regain your motivation. I guarantee it.” – Louise Bedford

 

www.tallinex.com wants you to make money from the markets.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • GFL Environmental stock, watch for a top of range breakout at https://stockconsultant.com/?GFL
    • PLBY Group stock watch, nice trend with a pullback to 1.83 gap support area, bullish indicators at https://stockconsultant.com/?PLBY
    • Date: 24th February 2025.   German Markets Surge as Friedrich Merz Set To Be Chancellor, Euro Gains on Fiscal Shift   Germany’s stock index futures and the euro rallied after opposition leader Friedrich Merz secured victory. Investors expect a shift toward increased government spending. US-China trade tensions rise as Trump tightens restrictions on Chinese investments. AI optimism fuels Chinese tech stocks despite regulatory concerns. Nvidia’s earnings report on Wednesday is expected to impact market volatility. German Markets React to Election Results Germany’s stock market and currency experienced a sharp rally in Asian trading after conservative leader Friedrich Merz won the country’s federal election. This victory aligns with pre-election polls and signals a potential departure from Germany’s traditionally strict fiscal policies. Futures tied to the DAX Index surged as much as 1.5% on Monday, recovering from early losses in a session marked by thin trading volume. Meanwhile, the euro strengthened against most major currencies, climbing 0.7% against the U.S. dollar. Market analysts believe Merz’s leadership could mark the end of Germany’s tight fiscal stance, with expectations that his administration will prioritize economic stimulus. This shift comes at a critical time, as Europe’s largest economy grapples with sluggish growth, geopolitical uncertainties, and the threat of a global trade war under U.S. President Donald Trump. The euro’s strength also reflects optimism that Merz will form a government quickly, which wasn’t a widely held expectation before the election.     US-China Trade Tensions Intensify While European markets gained, US-China trade tensions escalated as Trump ordered stricter regulations on Chinese investments in key sectors, including technology, energy, and infrastructure. The move is part of a broader strategy to limit China’s influence in strategic industries. Although not legally binding, the directive strengthens oversight by the Committee on Foreign Investment in the United States (CFIUS), a panel responsible for reviewing foreign acquisitions. JPMorgan strategists warned that this decision could reverse gains in Chinese tech stocks, which had rallied earlier in the year. Despite geopolitical headwinds, Chinese technology stocks have posted strong gains this year, largely driven by optimism in artificial intelligence (AI) and key policy shifts. The market remains under-owned by global investors, suggesting potential for further capital inflows. The growing AI industry has helped offset risks from US tariffs, with investor sentiment remaining bullish on leading Chinese firms like Alibaba and Tencent. Chinese officials reacted strongly, with Vice Premier He Lifeng raising concerns about Trump’s recent 10% tariff hike on Chinese goods in a call with US Treasury Secretary Scott Bessent. Additionally, sources revealed that Trump’s administration urged Mexico to impose tariffs on Chinese imports as part of broader trade negotiations.   Despite these challenges, investor focus remains on Nvidia’s earnings report on Wednesday, a key event that could drive market volatility.   Gold Nears Record Highs on Inflation and Central Bank Demand Gold prices held near $2,940 an ounce, just shy of last week’s record, as ETF inflows surged and the US dollar weakened. The precious metal is on its longest winning streak since 2020, fueled by rising inflation expectations and mounting geopolitical uncertainties under Trump’s administration. Lower US Treasury yields have also boosted bullion’s appeal, with traders now expecting the Federal Reserve’s first rate cut in July rather than September. Markets will closely watch Friday’s inflation data, a key indicator for Fed policy direction. Final Thoughts Markets are reacting to a mix of political and economic shifts, with Germany’s election outcome boosting European equities while US-China trade tensions create uncertainty for Asian markets. Investors will be closely monitoring fiscal policy changes in Germany, Nvidia’s earnings, and further trade developments for insights into market direction. For more financial market insights and updates, stay tuned. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news.   Andria Pichidi HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • INO Inovio Pharmaceuticals stock, holding strong, watch for a bottom breakout above 2.36 at https://stockconsultant.com/?INO
    • Date: 21st February 2025.   European PMI Disappoint, Weighing on Euro Before German Elections   The Euro is the first currency to witness the volatility on this month’s PMI reports. The French, German and British PMI data have resulted in the Euro being the worst-performing currency of the European Session so far. However, will the Euro continue to decline throughout the day? European Purchasing Managers’ Indexes The French Purchasing Managers Index was the first European index to be made public. The release resulted in the Euro instantly declining 0.24%. The main concern from the French data was the Services PMI which fell from 48.2 to 44.5. Previously the market was expecting the data to remain more or less unchanged. The weak data triggered the decline which came to a halt after Germany’s PMI was released.     The German Manufacturing PMI read 0.5 points higher than previous expectations and the Services PMI was 0.2 points lower. The data from Germany was a relief for Euro investors and the price rose 0.12% higher. However, traders should note that the price of the EURUSD continues to remain 0.20% lower than yesterday’s close. The price of the EURUSD will now depend on the PMI data from the US. The value of the US Dollar will depend on its PMI release this afternoon and the Consumer Sentiment Index. Analysts expect both the US Services and Manufacturing PMI data to remain above the 50.00 level in the expansion zone. German Elections 2 Days Away Germany is set to hold a general election this Sunday, February 23rd, following the collapse of the coalition of social democrats, liberals, and greens. Given the country's highly proportional electoral system, German polls provide a strong indication of potential government formations post-election. The main concern for Germany is the AFD party who are Far-Right Nationalists. Currently, ahead in the polls are CDU (centre-right), and AFD (far right), followed by the SPD (centre-left). Traders should note that the results of the elections are likely to trigger strong volatility on Monday, but also influence volatility today. Economists may become further concerned if the far-right gains power for the first time due to uncertainty. If the government, similar to France, is unable to form a coalition, this would also be a concern for the Eurozone. Furthermore, the Euro this week is also under pressure from comments from members of the European Central Bank. ECB Governing Council member Fabio Panetta said to journalists that officials need not slow interest rate cuts, as January's 2.5% inflation is still expected to reach the 2.0% target this year. He also advised the European economy is weaker than previously expected. EURUSD - Technical Analysis and Indicators The EURUSD is trading above the 75-bar Exponential Moving Average and 100-bar Simple Moving Average on the 2-hour chart. However, the price is moving away from the key resistance level at 1.05058 indicating the price is losing momentum. The short-term volatility is indicating the price is retracing downwards. On the 5-minute timeframe, the price is trading below the 200-bar SMA and is also forming clear lower lows and highs. Simultaneously, the US Dollar Index is trading above the 200-bar SMA on the 5-minute chart confirming no current conflicts. Currently, the US Dollar is the best-performing currency of the day attempting to regain losses from the past 2 weeks. Watch today’s Live Analysis Session for more signals as they develop!   Key Takeaway Points: Weak French Services PMI triggered an initial Euro decline, but German PMI provide a slight relief. However, EURUSD remains lower than yesterday’s close. The Euro’s direction now depends on the US PMI reports, with analysts expecting US data to stay in expansion territory. Sunday's German election could drive volatility, especially if the far-right AFD gains power or if coalition formation proves difficult. ECB official Fabio Panetta suggested no need to slow rate cuts, citing weaker-than-expected economic performance and expected inflation decline. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.