Practical stop-loss planning Seminar on 28 Feb 09

[toyogo00]

Hi FibMaster,

Thank you for your efforts to put up this VERY relevant seminar that most of traders love(implemented correctly) and hate(keep stopping out). Few comments:

a. Reasons for failure: One of them is "Under-capitalization". I've personally experienced it in my early part of trading. My psychology was never right (too tight on stop loss as my capital was too small) until I've put up a right size of capital that I know my average loss will be within 2% of the total capital.

b. I also like to share a good video on calculating risk : http://www.learningmarkets.com/index.php/20081125937/Forex/Forex-Portfolio-Management/risk-and-return-in-the-forex.html

c. I think the key concept in this seminar is about how to improve the stop loss strategy from a simple "fixed distance" to a more "Intelligent Strategy" - that is a very eye-opening concept - I like the concept of disaster stop loss to avoid from sudden surge of the price but the actual stop loss could be "intelligently" adjusted!

d. I think it will take a while for us to advance the "Intelligent strategy" from a basic to an advanced level as it really needs a lot of confidence in the strategy.

e. Overall, it is a very fruitful seminar over two hours except I may think the first portion - the money management is too long (it is a topic by itself) and I think we need more example on the Intelligent stop loss strategy to solidify the concept. (perhaps over the next few weeks we shall post the real trade to discuss how to practice this concept)

Thank you FibMaster!

Regards,
Toyogo

[sall44]

Hi, All

I enjoyed the seminar yesterday which was very informative, nearly 2 hours and would really like to say a big Thanks to the fibmaster for his time and efforts. Secondly Thanks to Toyogoo for the video link above very good. Being in the UK I normally get the seminar in the after noon and overnight my mind always works it off and finds a question !!! My question is on leverage, is it ever safe to leverage or after listening to the video above I suppose the answer is to ensure if you do leverage then to have your disaster stop at 10% of the account! This is of course when everything your indicators and your entry is in your favour, what is safe leverage?? One thing I questioned was if it was better to scale in and out multiple contracts, I have applied this strategy ,but only seldom. The chart of course has to be very strong trend for this to be applied appropriately, my question is if you have a strong trend and all you're doing is looking for pullbacks to sell into or dips to buy into, what is the safest leverage factor one can apply??

Thanks in advance

[toyogo00]

Hi sall,

I use the leverage for adding on the additional trade when my first trade is in profit (becomes free trade where I've moved my SL to BE).

For example, If I've capital of 100,000 and I buy one std lot, when that trade is in profit and I've moved the SL to BE. I cannot enter the 2nd trade if no leverage is used. On the other hand, If I used leverage, then I can buy additional pair while holding on to the first winning pair and so on. That's how I use leverage.

Thus it is more important to manage the stop loss and the position sizing. For example, I use max 100pips SL (the actual SL is based on Fib study but below 100pips, if Fib level shows more than 100pips, I forgo the trade and look for the next setup). If my capital is also 100,000, I can trade 2 std lots and my max drawdown is 2% per trade on my capital.

My broker friends told me that during the last 6-8months of enormous volatility in forex, many small retail traders were wiped out by their stop losses due to the market volatility.

Thus the survival is the key to any traders especially for the beginners rather than eager to win fast (FibMaster has pointed out repeatedly during his seminar as well).

Regards,
Toyogo

[paddycal]

Neal

great seminar on Sun morning ( well it was sunday morning for me !!! )
got a quick clarification question on the disaster stop......

for a trader who trades by hourly trend but tries to enter on five minute chart would the following be
considered suitable

example , 1 hour trend is strongly upward and we can go down to five min chart to buy dips.

We could calculate a suitable SK level using the 1 hour chart. Now this would be where our Disaster stop would be placed.

On the five min chart , we have HH and HL formation, so we are still good to go long.
we enter long at a retracement. we put in the disaster stop below the SK level defined on the 1 hour chart. In general
this would be much larger stop than what we would normally take, but we do not intend to let the price hit our stop.
we intend to get out manually well before the stop is hit...

supposing after our entry the price waffles around and goes nowhere.... doesn't make a higher high, but in fact
makes a lower low.

Could this be sign that the uptrend may be coming to an end and we may need to look at getting out of the trade.
we could either exit at market price and look to get back near our entry price ( various methods to get out of a
position )

i don't have any specific examples to show at this stage, i'm still getting my head around some practical
applications of this methodology and i hope i have explained this enough

so my questions are
1 ) is this what you meant about using Disaster stop with trade management.
2) in this 1hr/five min combo , is this method of using a lower low on the five min chart to signifying the need to get out the long
trade, an acceptable method

appreciate any comments/responses.....

Paddy

[Justin]

Neal,

I too want to express my appreciation for the information you presented and explained in the Stop Loss seminar. The discussion on money management, the concepts, and the practical examples are very helpful and have already improved my trades. The information and examples about disaster stops and the stop placement strategy using a lower timeframe chart was outstanding!

I recommend this seminar (and all of the FibMaster's seminar's for that matter) to anyone who has questions and is serious about improving their trading.

Regards,
Justin

[FibMaster]

Neal,

I too want to express my appreciation for the information you presented and explained in the Stop Loss seminar. The discussion on money management, the concepts, and the practical examples are very helpful and have already improved my trades. The information and examples about disaster stops and the stop placement strategy using a lower timeframe chart was outstanding!

I recommend this seminar (and all of the FibMaster's seminar's for that matter) to anyone who has questions and is serious about improving their trading.

Regards,
Justin

Justin and everyone,

Thanks for the great feedback. I do enjoy helping traders, it is very satisfying that attendees discover new ideas and implement them. It takes just one gem concept to make a huge difference.

Another stop-loss seminar has been scheduled for April 4th 2009. This is likely to be the last one until fall/winter 2009. The class is limited to 15 traders, book your seat now..
http://www.fibmarkets.com/pro_seminars/index.html

-Neal.

[FibMaster]

Hi, All

what is the safest leverage factor one can apply??

Thanks in advance

Haha, the absolute safest is not to trade at all. The leverage you should apply depends on your risk tolerance, per your money-management rules.

[FibMaster]

Neal

so my questions are
1 ) is this what you meant about using Disaster stop with trade management.
2) in this 1hr/five min combo , is this method of using a lower low on the five min chart to signifying the need to get out the long
trade, an acceptable method

appreciate any comments/responses.....

Paddy

Each trade is evaluated on it's own merits, of course. Generally I like the scenario that you outlined.