What? no stop loss? you are crazy!
@BarrowBoy
...since the main hedging correlations broke down some time ago...
I'm lost, could you please explain what you mean by the above?
1) I am a fan of hedging if you belive that market will come back again. If you close the order and reopen it you will pay the spread twice. Hedging sometimes can really save you some pips. And since in the long run the spread is a big enemy i think it is worth to NOT close the order.
2) With stoplosses the problem is that you sometimes exit at the worst place. In general i try to wait for a retracement and the exit even negative, but hopefully not at the worst place. Of course if you don't want to hedge you will get problems with a solid moneymanagement.
If you hedge, you might get caught in hedging the hedge order. This is where moneymanagement kick in.
On the topic of No-Stop-Loss. I was reading an article some time ago where the Broker was asked "whats the worse mistake newbie traders make" and their consensus was that "newbies biggest mistakes is not setting Stop-Losses". I don't know why I reacted the way I did, but to me this sounded like the Casino telling me not to take insurance in blackjack. The later is good advice for someone who is Not Counting Cards and an advice even I would give to strangers asking if it's a good idea to take insurance or not. However, to a knowledgeable player, this is very bad advice.
Every option the House gives you is a Double-Edge Sword. Insurance, Surrender, Hit or Stand. The same things I suspect happens in Forex. Scalp, Hedge, Leverage or Stop-Losses. One cannot point to any of these and say that's good or bad for the masses. IMO, it's a matter of how you use it.
I think it'll be very difficult to see any systems which uses Text-Book 2% or less risk-per-trade returning anything more than 30% per year on average. The advantage of this approach however when the system starts to lose due to a market change, the losses will happen slowly to allow the user to re-adjust the system or find a new system altogether.
If however you're running a NO-Stop-Loss & you reinvest All the profits I can almost guarantee a Total Loss of everything in the account. However the advantage of this approach is Systems which are capable of 100% returns every Month. This approach might work for someone who does not A) Trade a Huge Account, B) Trade a Account which hold the majority of their Net-Worth and C) Trading Amounts which are Easier to Recover from other parts of their Net-Worth. ie> It's just your allocated fun money part of your pay check.
As your account grows, you'll be forced to out-grow such money-management because of Volume alone and the Emotions it carries. Even if you had total dis-respect for money, or Ice-Waters running in your viens; I don't think the House (Broker) would treat you trading 100k account the same as they did when you were trading 10k. So it'll probably be worth it to keep searching for safer systems with lower drawdowns which are offering roughly the same risk-to-reward ratios.
My guess like in gambling, most people who have traded for over 2-years are hooked. If they lost their account to a margin call, they'd probably scramble up some more money and start a new account. And then begin the cycle of losing again, slowly but surely until they emotionally crack and deviate from the system again. Thats my answer to your margin call question. And no, you're right, they're not trying to stop their Losses because if they were they'd quit when they blew the first account.
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I would like to know how many people here live trade without a stop loss. If you have constructive thoughts share them here with everyone on this forum.
I will start this contraversial subject with a thought - If you are using a stoploss who's loss are you stopping - yours or the market's? How are you managing risk? What would happen if your account got a margin call?