Professional traders trade without a stop loss

Trading Forex without a stop loss
Some professional traders don’t use a stop loss. So, why is it advised to traders: “never trade without a stop-loss”?

By Guy Avtalyon


There are numerous opposing data on the web when it comes to trading forex without a stop loss. A few years ago, I read an interesting article about professional forex traders who never used a stop loss. It was utterly conflicting with my opinion. Well, I think that using a stop loss can protect your trades from more significant losses. But I found that these traders don’t want the algorithm to catch them. They don’t wish to algorithms to know where their orders are settled. 

Do I need to explain how big nonsense that is? You need stop-loss orders to protect your trades from huge losses. But they don’t use them.

And there is why they never do that.

Some of the professional forex traders are negligent and significantly rarely pay attention to risk management. Sometimes they are so sure in their ideas and things that they don’t need a stop loss.

I’m sure you had a chance to read about or watch forex traders trying to get out of their losing positions like mad just to provide modest profit or just break-even.

Some pro traders are unreasonable and unwilling to take a small loss if they are positive, they are right. In my opinion, this is irresponsible, and you cannot find many such traders staying in business for a long time. Usually, they end up burned.

Why trading forex without a stop loss?

Let me explain something. If you use a stop loss, you’re able to cut your losses quickly. When you place a stop-loss order, the trading platform will immediately close the trade when it hits that unfavourable level. On the other hand, a take-profit order is the highest level where you want to have profits. As you need to set a stop-loss order, you need to place a take-profit order no matter how strange it could sound. If you have a take-profit order in place, your trade is protected from price changes that can go against you.

But you want to know if there is genuine proof that trading Forex without a stop loss is possible. Also, you might want to know a precise strategy that entirely eliminates setting a stop-loss order.

And I’ll explain that particular strategy.

Trading Forex without a stop-loss strategy

Professional traders that never use a stop loss usually place a hedge on their initial position. You can find many methods to build a hedge and avoid setting a stop loss.

One of the most popular ways is to place a sell order at the level of stop loss. Let’s assume you enter the trade with a buy order, but it moves against your favour. So, instead of setting a stop loss, you can place a sell order at the same level.

It isn’t always a good move; very often, it can lead to a losing position. For example, if some unexpected but massive change in the market happens, you’ll lose a lot. Several years ago, it occurred to the Swiss franc. It increased in price enormously after it was unpegged of the Euro. Traders that didn’t place a stop loss for their trades that included sell orders for the franc had huge losses. That was a dramatic situation. So, you can avoid setting stop loss in trading forex, but you could face a lot of problems and huge losses.

Traders that used this hedging strategy and bought the EUR/CHF with a pending sell order, but without stop-loss, didn’t make money. But, whoever placed the stop loss instead of the hedge, had a fantastic trading day. Remember, on that day; the franc beat the Euro by over 40%. It was in 2015.

The arguments behind trading forex without a stop loss

Some of these traders believe that using a stop loss means accepting losses before the price finally moves to your direction. In my opinion, if you think the same, maybe it’s time to analyse the stop loss placement. I’m sure you’ll find where the problem is. Possibly you’re placing stop-loss point too close to your entry point. Keep in mind, a stop loss’s purpose is to limit your risk in each trade. So, try not to misuse it. 

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Some traders believe the excellent trading system is to hold a losing position until the price hit entry point and finally converts to a winner. Basically, this kind of traders avoids taking a loss. But will the price always come back to entry-level? I’m not so convinced.

Who can know will the price go up or down? No one is able to predict the exact movement of the price. 

What I know for sure is the price will change for thousands of pips from the current price. That’s reality, and I’m not speculating. Do you really want to bet against this fact? Are you sure you can oppose it? Can you have a winning trades without a stop loss? I would never bet on it.

Some traders could tell you the stop loss can be triggered by “stop hunting” managed by the big financial organizations and they don’t want their stop loss levels to be triggered accidentally. But we have to be honest with this because financial organizations are trading when important news appears. Such a situation could force the volatility in the market, it’s true. But you can place your stop loss far away enough to avoid the influence of the event. Anyway, if you’re a beginner in forex trading it’s better to miss trade during such a period.

Professional traders trade without a stop loss is a legend

You should ignore this. The truth is there always will be the wild traders in the market. Many would like to try their hands by taking too many risks. 

Trading forex without a stop loss could expose you to huge losses, and your profits could be unprotected. I know, getting stopped out isn’t the most pleasant, also it could be painful. But, don’t you think it is better to exit the position than to have losses? What you really have to do is to size your position small enough. In this way,  your stop loss level will be hit on extraordinary circumstances.

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