Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.
4 Comments on Tune in to Anna for the forex week ahead on Squawk Radio
Can one “subscribe” to Topsteptrader and if so I see no spot to do so on the webpage?
I don’t do Twitter or Facebook.
is there a direct way to receive E-mail notification of the broadcasts?
Hi Chuck – many thanks for your comment and I will do my best to help. You can find further details of TopStepTrader by clicking on the link. You do not need to be a subscriber to listen to Squawk Radio which you will find on the right hand side of the home page of TopStepTrader, and simply register as a guest to tune in. It is an excellent show and runs throughout the US markets with host Eddie Horn – lots of information, market news and guests. I am on twice a week on Monday and Wednesday 9.30 am Central Time ( 3.30pm UK time) for around an hour or so. I then release these as podcasts on my site and you can find the most recent ones on my personal site on the home page. I try to upload these on the same day of the broadcast. Finally you can also find all my latest podcasts here : and you can also subscribe to the podcast feed. I hope the above helps and many thanks once again and if you do have any other questions please just drop me a line – always happy to help – kind regards Anna
Subject: Stop losses & positioning
Hi Anna, I’ve very much been enjoying your beginners guide to Forex.
I’ve traded for a while, but have come to your book to hone my management processes and make them a little more watertight. One issue that keeps coming up and did again on the podcast was the positioning of stop losses. I understand the mathematics behind the placement, that you want to minimise your individual losses at say 1% of your capital and place the physical stop loss according to the relevant number of pips of a contract in relation to your capital exposure percentage. The problem is, and I heard you mention it on the podcast, I’ve always been suspicious of stops and the stop hunting that occurs throughout the market and now it sounds as if you have decided to not to use stop losses in future, but instead use other products. This subject is one of the main areas that drew me to your book in the first instance, the confidence to use stop losses positioning them with art rather than science and now I’m a little confused.
Could you explain whether you are still using stop losses or not? If not what products and setups are you using instead, as I presume you are still adhearing to position loss management rules?
Also as the SNB issue has raised, with major market movements, black swan events, stop losses appear to become irrelevant as even if they are placed in what could be considered a decent position, they are not triggered with large price gap movements in the market? Any ideas?
Hi Carl – many thanks for kind comments which are much appreciated, and I’m glad you are enjoying reading Forex For Beginners. It was indeed a coincidence that we started to discuss the subject of stop losses, which was the day before the SNB announcement, and one we will be covering in more detail in a special event with TopStepTrader soon. So let me just clarify my views and how I approach this in my own trading, and also in the context of the events of last week. First, there is nothing inherently wrong in using a stop loss – it is a simple order which does what it says – generally, and I always advise traders to use them, whether novice or more experienced and I use them myself as you might expect. However, they are far from perfect. Stop hunting occurs at all levels from broker to market maker, and with an active order in the market these are always visible and a temptation. Whilst stop hunting by market making brokers is less prevalent now, it still goes on with the less scrupulous and more so with the interbank market makers where it occurs regularly. Last week’s extreme events also highlighted another problem – namely the simple stop loss is no protection during such price moves, and the same was true of the ‘guaranteed stop loss’ which again proved ineffective. Such violent moves can and do happen, albeit infrequently, but when they do, the stop loss is a blunt instrument at best and certainly flawed. In terms of positioning of the stop loss itself, my thoughts are that these should always be placed with care and above or below the most recent level of price resistance or support as this then provides a natural barrier created by the market ( provided this fulfills a trader’s risk and money management rules). Better still to move to a second or third level of resistance or support and place any stop behind these levels. These are rather like old fashioned fortifications – protecting those inside. The congestion phases of price action fulfill a similar role when applied to the stop loss.
And finally, the point I was making on air in the podcast, that over the last few years I have sought out alternative ways to manage risk in my trading positions using alternative instruments, and one of these is explained in the binary options book, just published, where combining a position with a binary spread allows the risk on the position to be managed in a different way. The stop loss is still used, but when combined with this instrument allows it to be set much deeper allowing the position to breath whilst also defining the risk on the position clearly. It is rather like taking an insurance policy – you pay a premium for the insurance which you may or may not need. In return you have protection. Using the stop loss on its own, requires tighter placement and management, but using this approach allows the stop loss to be widened dramatically, with the risk then managed through the mechanism of the binary spread. I hope this helps to explain and clarify, and just to restate, I am not suggesting that any trader takes a position without using a stop loss. They are imperfect but we live in an imperfect world, and as traders we have to try to find alternative ways to manage risk which is what trading is all about, and by considering other instruments to correct some of their shortcomings. Black swan events will always occur and force us to face up to some difficult questions and last week was one such event.