Trading Without Stops – A Different Approach!

in this video guys we’ll talk about trading without stops

stay tuned

hey guys welcome to you all right so stop losses are

crucial to manage risk and i want to just be clear here that

uh we are not talking about zero risk management

what i’m saying in this video i’m gonna run through some kind of ideas with you is that

very many traders and i’ve been through this myself

are constantly getting stopped out in a trade

that actually if they hadn’t had a stop already been a little bit

wider would have worked out now how many of you can relate to that you probably can

let me know in the comment section below uh if you think hey this is exactly the situation i’m in

okay so the dilemma we have is this if i by the way i’ve got a ud

uh usd chart here any currency pair could be any commodity whatever four hour chart super popular time frame to trade uh four swing traders you know if you are let’s say you’re buying at support here you got pinged out you’re frustrated you read it under the low it went out push the highs

let’s say you went short or high here there’s so many examples

um where you get stopped out on a trade that’s otherwise good it’s just too tight but the dilemma we have is that we don’t want to let a trade go massively against us so let’s say we’re buying this support level right the market’s come back uh you’re buying the support level here you don’t want it to just completely break and sit with it which is why we have to have

some kind of risk management in place because if the price goes all the way down here

you’re going to undo all your gains and it makes no sense so we have this situation where we are

caught between needing to get out of a trade where the thesis is negated and also staying in the trade where it’s just a bit of noise has taken out an arbitrary level because then today guys you know if we just let’s just pick this as a level this is an arbitrary level in fact this is probably better for this current time period here this is an arbitrary level that we’ve seen now it may be that there’s a buyer sitting there holding things maybe there’s a big order to be done maybe sellers are shutting off whatever reason that’s for another video that’s just discussed previously about support and resistance and things like that however if price were to come down and let’s say test here yes it’s broken but are we thinking about what we’re doing we’re buying the market add a pullback at a support level

if it’s just broken a little bit does it really mean the trades negated in some circumstances yes however we also have a scenario where hey we could trade this and look at it objectively if the market comes down

we give it a day it then comes back up we can then maybe put our stop below the low

we can trade these things now the dilemma let’s go back to the dilemma getting ahead of myself a little bit here the dilemma is we don’t want to give back too much so here’s something to consider many traders

will take x amount of risk per trade so let’s say

on each trade you’re taking let’s use an argument take a number hundred dollars risk per trade

so you’re taking 100 risk per trade over a 10 trade period

that’s a thousand dollars risk so you say to yourself right i’m fair to risk a thousand dollars this week or whatever it may be i’m prepared to do 10 trades or a thousand dollars this month whatever it may be

and i’ve got my specific strategies that i’m looking to do

i know what i’m trying to achieve fine however

the situation you’ve got is that if you’re getting stopped and stopped and stopped and stopped

that’s the same risk as taking one trade with a thousand dollar risk so here’s something to consider by the way never recommendation guys always got to think for yourself this and work out a risk in every single deal you’re taking

high risk all the other stuff if you are taking a trade

where you have a hundred dollars risk think about

having a stop an emergency stop way away from the price

like here for example where that would be the 10 trades maybe 10 traders is too much

maybe five trades is a better example let’s go five trades that will be a five trade stop out okay so you now normally would have a stop here which would be a hundred dollar risk bang just under that support you’re looking to buy the pull back to support by the way this is not recommendation to trade this a aud usd at all i just brought it up as an example happened to be up i didn’t want to cherry pick anything specifically just wanted to run on the fly and kind of give you guys an example that was coming to my head so let’s say you’re buying the support as it comes here let’s say your stops here let’s just 100 risk and it’s probably gonna be a little bit lower but you get the idea for doing five to one

five times the risk what you’re doing now is rather than having your stop there you’re saying okay i’m prepared to take the risk of five trades now in your mind this is where we’ve got to we get a bit confused we think oh we’re taking 500 risk on this trade that’s a lot but no that’s the very very worst case scenario what you’re doing is you’re

taking five trades of risk but instead of getting cut

cut cut cut five times in a row and losing the 500 you’re risking it on one however

what you’re also doing is you’re also saying to yourself right

if we break the support level that i’m buying out or a hypothetical area that i would have had a stop in

uh you know this is a great this is a great position let’s just put it on as a dash dotted so this would be our normal stop if we’re trading 100 risk from this point on you can choose to close the trade so this instead of being an automatic stop out which by the way guys when you go back and you back test anything as soon as you add a stop loss into the mix it ruins the results it just makes it a really awful proposition when you take a stop loss away you’re all of a sudden you’ve got something that’s usable so what does that tell us it tells us that stops aren’t as effective

but it also tells us hey if we use it as a guide

most of the time it’s going to be profitable however we’re going to get caught out from time to time so this is a hybrid model you can think about you can say right i’m going to trade without a normal stop i’m going to put an emergency stop in which is five times my initial risk my normal risk should i say so it’s a hundred dollars that’s 500 away it’s a thousand dollars it’s five thousand dollars away you get the idea but when the price goes through a level then i would normally have my stop at however you’re judging now by the way you should still stick to the routine of placing the stop

a place where the train you think is negated i.e under the level above a wick whatever it may be you know below a trend line anywhere you’ll normally put your stop and adjust your position size to suit don’t change that but just go right that’s my mental stop and from here so if i now were to draw a uh kind of rectangle area here from here to here it oops so let me just pop that there get a bit carried away with that from here to there

we now have the opportunity to close the trade

on your terms if it got to here the 500 level in our example you’re out no no negotiation iron discipline you cut it but you have the option to use your intuition to use your price action skills to use all those things

to decide if at that point you should close the trade or not

so maybe it sits there maybe it does this the next day it works lower and bounces back up fine you keep it you go right well actually now i’m gonna have my stop under that low that becomes a little bit better it’s done a little bit of a flurry so downside it’s kissed a little bit there downside action it’s not liked it’s put back up it’s still strong i’m gonna hold it if it does it again

i’m gonna assume it’s broken if it’s continuing lower and lower

you can then say to yourself just something a little bit different guys you can say to yourself okay i will come out on the first pop higher if we get a pop higher a green day i’ll close that because it’s done three days to the downside we’re now running this territory here i need to try to get out of the tray at the best possible price and again this is a little bit different from normal thinking you’re waiting for a little bit of a green to get actually get out of the trade before it goes lower now that’s not always going to be the case and very occasionally you’re going to get caught in something that stops you out that’s why you have that emergency stop position in which is the no negotiation things just gone wrong let’s say you were shorting it here ripped up and stopped you out but if you look at the chart on all charts how many times does price do a massive run in one direction very very rarely so if you’re setting yourself away from that

and then you’re seeing okay well let’s a great example would be here let’s say you bought this for whatever reason came down hadn’t quite stopped you out you can still get out at a better price and still be within the rules of the game you’re not not trading it hoping you’ve allowed yourself the flexibility to get out within this zone whatever you decide to do now this is a little bit more advanced this is something when you’ve got a strategy but you feel like you want to give things a bit more room you feel like you want to be a little bit more um use a bit more of a human element rather than being so binary with your entries and exits but it’s something to consider

it works well under the right conditions you could have the good discipline for it

but if you’re getting stopped and stopped and stopped and stopped and look at all the money you’ve lost on the stock consider risking a bit more per trade in a worst case scenario in reality that’s probably not going to be hit in reality you’re going to pull the trigger and cut the trade way before then

so it’s not really that much risk but it gives you the opportunity for price to maybe test around your stop loss you’re not so stressed about the position either you’re not thinking i’ve been stopped out you can a little bit more cooler and calmer about it it’s not for everyone but it’s something

to consider by the way guys if you haven’t checked out trader mastermind we’re open we’re flying again loads more stuff going on there’s probably a video that’s going up or hasn’t gone up already will be up or check it out anyway going into full detail about this new offer loads more

opportunity there and now we’ve got more calls per day we’ve got the slack group we’re growing massively got some great guys in there do not miss out if you are serious about your trading and this is kind of the sort of thing we will talk about or we do talk about more you know if you’re brand new to it great come and join us this is this kind of stuff we talk about different ways of approaching the market uh whatever time frame we’re training whatever markets you’re trading so go and check that out i’ll they’ll be linked in the description below traders mastermind take care guys see you next one

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