The Stop Loss Dilemma - Risk Management vs. Strategy Performance
Stop Losses pose an important dilemma for traders. On the one hand, a stop loss is required for trade risk management, but on the other, they often cause degradation of trading strategy performance.
In this episode, Martyn Tinsley explains a technique he uses and calls the 'emergency stop loss'. This provides both the risk management of a traditional stop loss but when combined with alternative trade exit rules, also helps to maintain good levels of long-term trading performance.
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This is Episode 21 in the Darwinex 'Trader Evolution' Playlist: • Trader Evolution | From trading as a hobby...
Video Contents:
00:00 Pros and cons of stop losses
00:29 Why Darwinex?
01:24 The dilemma of stop losses - risk management vs. performance
02:17 Stop losses are analogous to insurance
03:50 Use of an emergency stop loss
05:12 Context of mean-reversion in a trading range
06:00 Emergency stop loss
08:08 Alternative loss-making trade exits
10:28 Summary
Content Disclaimer: Past performance is not a reliable indicator of future results. The contents of this video (and all other videos by the presenter) are for educational purposes only and are not to be construed as financial and/or investment advice.
Risk disclosure: https://www.darwinex.com/legal/risk-d...