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  • Stop loss hunting

    Hi,
    what do you think about this argument? I just found this article quite interesting
    http://www.jarrattdavis.com/forex-br...t-stop-losses/
    Cheers.

  • #2
    Jarrat Davis performance

    http://www.myfxbook.com/members/Jarr...jarratt/946541
    http://www.myfxbook.com/members/Jarr...is/ryan/950809

    3rd one he deleted may be he blow it lol.

    Looks like another kruger to me

    Thanks for sharing this video Pianetti

    Comment


    • #3
      Actually I'm not so interested about Jarrat's performance
      I saw a lot of traders don't use hard stops for this reason, if I remember well Viper said this in Nick's video or wrote somewhere in this forum.

      Comment


      • #4
        Originally posted by Pianetti View Post
        Actually I'm not so interested about Jarrat's performance
        I saw a lot of traders don't use hard stops for this reason, if I remember well Viper said this in Nick's video or wrote somewhere in this forum.
        Jarrat seems to have 50% of the information, and made the rest up. Those spikes are orders searching for liquidity no doubt. The idea that retail stop losses can provide that liquidity is just dumb, sure the endless stop losses put just behind the first S/R point will get taken but its a tiny part of the liquidity needed. . People forget most the market is not interested in placing a trade and making a few pips. Calling it stop loss hunting or stop running is not technically correct, its a related to liquidity and as stated before the entire retail worlds SL not going to suck price into those levels. Either way it does not matter what you want to call it, we just know that this pattern exists on a regular basis. Sooo it giving us an opportunity to take advantage of it. Once you have had enough chart time studying this behaviors on one or two currencies, you'll see it coming.

        As for traders not using SL, that just complete madness, ive never met a pro that doesn't. Now how they use the SL varies. A mental stop loss is used more often then not, and they will use their experience to judge if price will keep going or just a whip up. Example if the SL is 20 pips, and price suddenly spikes on a one min that is not event driven, it could push 10pips beyond the mental SL, but experience tells you it will likely retrace. Letting you get out at your 20 pips or less. But if price is working its way up to your stop loss, then just get out before it gets there. Naturally there is the emergency SL that will be based on equity, and will close everything. The real problem is not with your stop loss, its with the average random entry.

        All traders has certain trades that he repeats over and over, each of those trades will have there own custom risk profile. So how is the stop loss planned, well when you have done the same trade a thousand times. You will know how far over your entry on average price might moved X percentage of the time. What percentage it completely fails, and what percentage you right on the money. Having this information will tell you how large a stop loss you need, which intern allows you to calculate the lot size for the trade according to your risk profile. You then place your full emergency stop loss on equity risk. All pros will risk on average 0.25% of the equity, and for the highest probability trades up to 2%. Sure if you have 5k or 10k, then risking more does not matter, but this is just from the perspective of managers that handle customer funds. Reputation is everything in this game, so not letting them know who you really are after blowing half their account is key

        Jokes aside understanding liquidity in the market is a huge advantage, and worth spending a lot of time researching.

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