Why is trading without stop-loss considered absurd for many! - page 29
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There is one little secret that everyone knows -- everyone always trades with a stop loss.
Definition 1: "A stop loss is a way of limiting losses in portfolio management. It is an instruction to close a position in case of untoward price movements".
Definition 2: "Stop Out - A stop out is a forced closure of a client's position at the current market price.
Therefore, there are three types of stop out or "loss limiting method":
-- a) explicit in the form of a pre-specified stop-loss price;
-- b) Not explicit, in the form of a function that will close on the market at a loss upon the occurrence of certain conditions;
-- c) a stop out according to as a forced closing of positions by a third party.
That is, there is always and everywhere a stop loss. And without a stop-loss, by its definition, no one ever trades, hasn't traded, and won't trade.
And all thoughts such as: a) I always trade with a stop-loss, or b) I never trade with a stop-loss, are essentially the same thing. The only difference is the understanding of the process.
There is one little secret that everyone knows -- everyone always trades with a stop loss.
Definition 1: "A stop loss is a way of limiting losses in portfolio management. It is an instruction to close a position in case of untoward price movements".
Definition 2: "Stop Out is the forced closing of a client's position at the current market price.
Therefore, there are three types of stop out or "stop loss method": a) explicit, as a pre-specified stop loss price -- b) non-explicit, as a function that will close out at the market with a loss at the calculated price -- c) stop out according to the terms of the client agreement.
So there is always and everywhere a stop loss. And without a stop loss, by its definition, no one has ever traded, has never traded, and will never trade.
And all thoughts like a) I always trade with a stop-loss, or b) I never trade with a stop-loss are essentially the same thing. The only difference is your understanding of the process.
Ignorance. There is an option without fixing losses. How can the understanding be different if only profit fixing, take profit work ( or stop loss at breakeven and then on to the positive side).
There is one little secret that everyone knows -- everyone always trades with a stop loss.
Definition 1: "A stop loss is a way of limiting losses in portfolio management. It is an instruction to close a position in case of untoward price movements".
Definition 2: "Stop Out is the forced closing of a client's position at the current market price.
Therefore, there are three types of stop out or "stop loss method": a) explicit, as a pre-specified stop loss price -- b) non-explicit, as a function that will close out at the market with a loss at the calculated price -- c) stop out according to the terms of the client agreement.
So there is always and everywhere a stop loss. And without a stop loss, by its definition, no one has ever traded, has never traded, and will never trade.
And all thoughts like a) I always trade with a stop-loss, or b) I never trade with a stop-loss are essentially the same thing. The only difference is the understanding of the process.
You have it all sorted out. Bravo.
But what if I have no "target price" and have absolutely no idea where I will close a losing position? That is, the closing price is determined at the moment of closing (order placement).
You've shelved it. Bravo.
But what do I do if I have no "settlement price" and am completely unaware of where I will close a losing position? That is, the closing price is determined at the time of closing itself (placing the order).
Please read carefully:
close a position in case of untoward price movements".
Definition 2: "Stop Out is the forced closing of a client's position at the current market price.
Therefore, there are three types of stop out or "loss limiting method":
-- a) explicit in the form of a pre-specified stop-loss price;
-- b) Not explicit, in the form of a function that will close on the market at a loss upon the occurrence of certain conditions;
-- c) a stop out according to as a forced closing of positions by a third party.
That is, there is always and everywhere a stop loss. And without a stop-loss, by its definition, no one ever trades, hasn't traded, and won't trade.
And all thoughts such as: a) I always trade with a stop-loss, or b) I never trade with a stop-loss, are essentially the same thing. The only difference is the understanding of the process.
read carefully:
-- b) not explicit, in the form of a function that will close on the market at a loss if certain conditions occur;
Now (in adjusted form) the definition fits better). At the "settlement price" spoiled everything.
Incidentally, the phrase "will close on the market" is also generally incorrect. In particular, there is an option to close inside the spread on the exchange, and that is certainly not on the market.
Misconception. There is an option, without fixing losses. How can the understanding be different if only profit fixing, take profit work ( or stop loss at breakeven and onwards to the positive side).
When the process is not or vaguely understood, then start at the beginning -- namely -- give a definition.
You talk a lot in this thread about stop-loss -- but you never say what you mean by stop-loss.
So in essence -- you're talking, arguing about nothing or something, and each to his own.
When you give that definition -- it may be so that the need for statements, reasoning, questions, doubts -- will disappear by itself.
When the process is not or vaguely understood, you start at the beginning -- which is to define it.
You talk a lot in this thread about stop-loss -- but you never say what you mean by stop-loss.
So in essence -- you're talking, arguing about nothing or something, and each to his own.
But when you define it, it may be that statements, arguments, questions, doubts, will disappear by itself.
A stop loss is a fixing of losses, why talk about something everyone should know!
A stop loss is a fixing of losses, why talk about something everyone should know!
A stop out falls within your definition.
Stop out conditions are defined in every client agreement without exception.
Therefore, no one is ever and under no circumstances can or does trade without a stop loss.
That's why the question you asked in the title of the topic: "Why trading without a stop loss is considered absurd by many people" - is absurd from the beginning.
p.s. Definition: "Absurd (from Latin absurdus, "incongruous, ridiculous") -- something that is illogical, absurd, stupid, out of the ordinary, contrary to common sense.
A stop-out falls within your definition.
Stop out conditions are defined in every client agreement without exception.
Therefore, no one is ever able to and does not trade without a stop loss under any circumstances.
That is why the question you asked in the title of your topic, "Why trading without a stop loss is considered absurd by many people" is absurd from the very beginning.
By the way, there are strategies for which stop-out closures are built into the strategy itself - Martin, Ilan-like strategies.