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No stop loss for long-term trading in index futures?

Discussion in 'Derivatives' started by helpme, Aug 2, 2017.

  1. helpme

    helpme

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    For intra-day day trading in stock index futures, I understand the importance of having stop losses. For longer-term trading that can span for weeks and months, is it advisable not to have stop losses? Having stops may cause a long-term trader to lose his position on a day which has a big spike in price.
     
  2. tech/a

    tech/a No Ordinary Duck

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    How deep are your pockets?

    You'll need an awful lot with your broker.
    Futures are a leveraged product.
    It bites both ways.
    Particularly if you have more than 1 contract.

    If you miss a move you either didn't see it coming or
    Something outside of your analysis happened.
    Personally I'll take a stop.
     
  3. Wysiwyg

    Wysiwyg Everyone wants money

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    'Trading' securities should use a stop loss. T.A. wise longer term, you would need to locate a price that if hit would (to you) indicate your initial trend analysis is wrong or the trend has likely ended. Trend channel breaks, significant support level breaks, M.A. price crosses/M.A. crossovers or negative international news are some of the tools used but in no way absolutely indicate a trend is over.
     
    Last edited: Aug 2, 2017
  4. helpme

    helpme

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    Nowadays in electronic financial markets, the incidence of flash crash is rising. Having a stop loss can trigger a bad price stop on a flash crash day, particularly if the stop is placed at a safe and far away price point.
     
  5. CanOz

    CanOz Home runs feel good, but base hits pay bills!

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    At the end of the day, your job is to manage risk. If you want to trade with no stop then you'll need a larger account and postion size so as to avoid major damage to your account. In other words, control your risk with size.

    Take your favorite instrument and research the worst case scenarios, let that determine your risk - be that 1-2% of total capital.
     
    helpme likes this.
  6. Wysiwyg

    Wysiwyg Everyone wants money

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    You could have a mental stop loss and execute it manually to avoid being tagged by what is infrequent flash crashes. Set up an alert system to your mobile device for when price nears your mental stop loss. This to avoid constantly monitoring price action. Obviously if sleep deprivation becomes an issue then I wouldn't participate at all.
     
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