Limiting Loss in Day Trading

dekac · 17-05-09, 06:54 PM

Hi Traders

Hope all things going well with you...
Ok,let's talk about: Day Trading...

One of the hardest concepts for new traders to grasp is that of limiting loss. Let?s say you make a trade for a currency that is heading down because you believe that it?s near its support point ? the point where it will rebound and start heading back up. Instead, it breaks the point and keeps heading down ? you?re losing money instead of making it. You have two choices ? hold onto it because you KNOW it will start heading back up soon, or get rid of it and limit the amount of money you?re going to lose. In day trading, the name of the game is limiting your losses and maximizing your wins ? decide ahead of time just how much you?ll allow each trade to lose before you sell it, and then STICK TO YOUR LIMIT. By the same token, decide how much profit you want to make, set a sell order for when the currency reaches that point ? and sell when it hits the mark...

Regards
dekac

FXCode · 19-05-09, 08:39 AM

Just use Stop Loss that is logic - that when price reaches it, the basis for your position is gone. Doing this will ensure you won't stay in a losing position.

StockTrader · 06-07-09, 09:46 PM

You're right about setting stop-loss orders in advance as discipline is important (and maybe the most important) aspect of day trading (whether it's financial spread betting, cfds and forex).
But many amature investors set the the limit too close and thus exit very good positions too early as just a few points flactuations kick them out of the positions.
Just make sure you don't trade just for a point or two but rather 100pips.

AdamN · 08-07-09, 06:48 PM

Locking profits with Trailing Stops is a wise idea

liebesweet · 10-07-09, 02:13 AM

I think stop loss - target profit or entry - exit is an united one , if we got no SL equal with we got no projection of our system trading. There's always SL in evry trading system , if we don't use it.... evrything become unclearly or there's some trouble with "the entry".

forexboy · 12-07-09, 11:20 AM

I encounter a strategy known as hedging and the author of the strategy does not suggest using a stop loss.

AdamN · 13-07-09, 08:48 AM

Quote:

Originally Posted by forexboy

I encounter a strategy known as hedging and the author of the strategy does not suggest using a stop loss.

When you hedge your position you don't need to use SL, because your equity will be almost stable (you'll only get overnight interest and other fees, which is small)

But hedging should only be done by professionals, otherwise you'll get more minus on the other position compared to the one in profit

unless if you're planning to close it within the next few months (expecting to be in profit) XD

forexboy · 20-07-09, 03:11 AM

Adam,
I'm interested about using a system without using stop loss because I think prices will usually come back to its original position.

stock-trading · 24-07-09, 02:44 PM

one can limit the loss in day trade by simply mastering over tactics and rules of stock trading

realFXpips · 05-08-09, 09:20 PM

You mean without setting a stop-loss? I
think trading without stop-loss is a bad
money management behavior.

Cheers!

17-05-09, 06:54 PM	#1
dekac Junior Member Join Date: 19th June 2007 Posts: 23	Limiting Loss in Day Trading Hi Traders Hope all things going well with you... Ok,let's talk about: Day Trading... One of the hardest concepts for new traders to grasp is that of limiting loss. Let?s say you make a trade for a currency that is heading down because you believe that it?s near its support point ? the point where it will rebound and start heading back up. Instead, it breaks the point and keeps heading down ? you?re losing money instead of making it. You have two choices ? hold onto it because you KNOW it will start heading back up soon, or get rid of it and limit the amount of money you?re going to lose. In day trading, the name of the game is limiting your losses and maximizing your wins ? decide ahead of time just how much you?ll allow each trade to lose before you sell it, and then STICK TO YOUR LIMIT. By the same token, decide how much profit you want to make, set a sell order for when the currency reaches that point ? and sell when it hits the mark... Regards dekac

19-05-09, 08:39 AM	#2
FXCode Junior Member Join Date: 13th May 2009 Posts: 9	Just use Stop Loss that is logic - that when price reaches it, the basis for your position is gone. Doing this will ensure you won't stay in a losing position. __________________ FXCode Inc. Expert Advisor Developer

24-07-09, 02:44 PM	#9
stock-trading Junior Member Join Date: 24th July 2009 Posts: 1	hi one can limit the loss in day trade by simply mastering over tactics and rules of stock trading __________________ Top Penny Stock Alerts and Newsletter Buy Penny Stocks Penny Stock Picks Online

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06-07-09, 09:46 PM	#3
StockTrader Junior Member Join Date: 1st June 2009 Posts: 12	You're right about setting stop-loss orders in advance as discipline is important (and maybe the most important) aspect of day trading (whether it's financial spread betting, cfds and forex). But many amature investors set the the limit too close and thus exit very good positions too early as just a few points flactuations kick them out of the positions. Just make sure you don't trade just for a point or two but rather 100pips.

08-07-09, 06:48 PM	#4
AdamN Banned Join Date: 27th April 2009 Posts: 55	Locking profits with Trailing Stops is a wise idea

10-07-09, 02:13 AM	#5
liebesweet Junior Member Join Date: 10th July 2009 Location: US Posts: 2	I think stop loss - target profit or entry - exit is an united one , if we got no SL equal with we got no projection of our system trading. There's always SL in evry trading system , if we don't use it.... evrything become unclearly or there's some trouble with "the entry".

12-07-09, 11:20 AM	#6
forexboy Junior Member Join Date: 28th June 2009 Posts: 20	I encounter a strategy known as hedging and the author of the strategy does not suggest using a stop loss.

20-07-09, 03:11 AM	#8
forexboy Junior Member Join Date: 28th June 2009 Posts: 20	Adam, I'm interested about using a system without using stop loss because I think prices will usually come back to its original position.

05-08-09, 09:20 PM	#10
realFXpips Junior Member Join Date: 27th June 2008 Posts: 21	You mean without setting a stop-loss? I think trading without stop-loss is a bad money management behavior. Cheers!