I was just wondering if any of the C2 software developers that have created trading systems use hard stop losses on their trades? Why or why not? I currently do but considering a different approach.
Yes, I use them on both of my stock trading systems. Honestly they have protected me from taking on some larger absolute losses but have likely cost me subscribers (no one likes to see 10 stop losses hit in a row and take a 10% drop in equity). Despite the logic of having them, most subscribers don’t like having them be hit and often believe that the trade would “correct itself” over time.
In most of the development I have done, I find that stop losses hurt performance more than they help it, over the long run. BUT, the problem is that not having stop losses can lead to ruin a lot sooner. So, in most systems I have, I view them as a necessary evil. The lower performance is the cost for having a lower risk of ruin.
We use stop loss at all times. Without them, systems will be in financial ruin. The people that do not use stop loss have weak money management risk implemented into their system,
i use hard stop loss as it prevents from the unexpected, it sometimes diminishes the performance. you can also size your position according to your risk, and in this case you do not need to use stop loss… you need to a do a thorougly backesting of your trades
My stops have just been run on a lot lately but I understand they are a necessary evil so was just trying to see if there are any other options to try and mitigate this risk. I wonder if I could implement a type of hidden stop where my application knows was the stop should be and using a quote monitor i could just place a live sell order if the price gets there without actually having a stop order in place.