Cutting your losses short? What does this mean to you?

[sunnyfx]

Hi,

I think about this statement a lot. I mean I hear it all the time.

Just would like to garner some different opinions on what this commonly used statement means to other traders.

I guess to some it would mean, set your percentage risk per trade and if you get stopped out. so be it and you are a few percent down on your account.

While to others it could mean if the trade starts to move against you, you get out and re-evaluate or even re-set your order.

Any thoughts?

Sunny

 

[TheForexGuy]

We cut our losses short and maximize on our gain by using positive risk reward in our money management.

It's also important to pre-define your trade risk before we enter the trade, so you know how much money you're going to lose if the trade doesn't work out.

But you're right, some of these traders just throw on trades with lot sizing they've pick out of their head, so they have no idea what type of money is on the line, it's just a 'guestimate'.

Some of them even open trades with no stop loss, and just manually close the trade when price starts ticking against them. Funny thing is the trade usually moves back in their favor once they exit. These guys are just forever chasing their own tail, reacting to small vibrations in the market.

 

[sunnyfx]

I guess that this is one of those statements that gets thrown around by those public forum heroes to make them sound like they know what they are talking about.

Here in the War Room, we cut our losses short and maximize on our gain by using positive risk reward in our money management.

We also pre define our risk before we enter the trade so we know how much money we've lost if the trade doesn't work out.

But you're right, some of these forum heroes just throw on trades with lot sizing they've pick out of their head, so they have no idea what type of money is on the line, it's just a guestimate.

Some of them even open trades with no stop loss, and just manually close the trade when price starts ticking against them. Funny thing is the trade usually moves back in their favor once they exit, these guys are just forever chasing their own tail, reacting to small vibrations in the market.

Excellent, really appreciate your comments here. You are dead right about hero traders.

I used to be on this private forex website where the head trader always showed his amazing equity curve and everybody thought he was the hero trader, hardly ever losing. It was only when I became a trader for this website's fund that I found out he was just carrying all his losing trades, He never set stops. Never. He planned on waiting for the market to come back??? He just never showed his live equity balance.

Needless to say, I became extremely disillusioned with this group and their so called hero.

Sunny