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Trading Without Stop Loss Strategy: Is It Feasible?

Although it can potentially yield substantial profits, trading without a stop loss is highly risky. If you plan to implement this strategy, it's advisable to first test it on a demo account. In forex trading, no trader can accurately predict where prices will move. Despite thorough market analysis, many traders still fail to profit consistently. This is where placing a precise stop loss plays a crucial role in safeguarding your account from significant losses, especially if prices move against your current entry position.

However, experienced traders may have contemplated trading without stop losses. So, how can this be approached? 


Before delving further into trading strategies without stop losses, it's crucial to read the following disclaimer:

  • Trading without stop losses can increase the risks in your trading activities.
  • If you plan to implement this strategy, it's essential to first practice on a demo account.
  • Never attempt trading on a real account without a proven effective trading system.
  • Avoid trading with large lots and refrain from trading during periods of high market volatility (around High Impact News events, etc.).
  • Trading without stop losses is highly risky and not recommended for novice traders.

Reasons for Trading Without Stop Loss 

Experienced traders may have their reasons for not using stop losses. They might have effective risk management strategies that do not rely on stop losses. Quoting Forexop.com, here are some reasons for trading without stop losses:

1. Brokers Exploiting Stop Losses 

By setting a stop loss, you indirectly inform brokers of your exit plan at a specific price level. Some brokers may exploit this situation to profit, especially if they operate as market makers (Dealing Desk). Market maker brokers work against your trading positions. When you incur losses, they earn income. This practice is known as stop loss hunting.

2. Stop Losses Caught by Temporary Price Spikes 

Market movements are unpredictable. Sometimes, despite correct analysis, prices briefly spike and trigger your stop loss before returning to the predicted direction. This often occurs during high volatility, marked by long shadows on candlesticks.

3. False Sense of Security 

Some traders view stop losses as safety nets. Feeling secure with stop losses in place, they may rush through their analysis and become careless. It's akin to riding a bike with a safety device that encourages risky behavior.

4. Ineffectiveness During Slippage 

In extremely volatile market conditions, slippage is highly likely. This poses a significant issue for traders who rely on stop losses for safety. Slippage can cause executions at unexpected price levels, resulting in unexpected exits.

Trading Without Stop Loss Strategy Example 

Here's an example of a trading strategy without stop losses, sourced from ForexTradingStrategies4U: 

Sell Entry Rules:

  1. Wait for EMA-7 to cross below EMA-14.
  2. Identify Sell Entry opportunities.
  3. Enter Sell if a bullish candlestick (green) forms a Higher Low pattern.
  4. Exit the trade when a bullish candlestick forms above EMA-14.

Buy Entry Rules:

  1. Wait for EMA-7 to cross above EMA-14.
  2. Identify Buy Entry opportunities.
  3. Enter Buy if a bearish candlestick (red) forms a Lower Low pattern.
  4. Exit the trade when a bearish candlestick forms below EMA-14.

Important Notes:

  • Consider various risks before using this strategy on your live account.
  • Continuously monitor charts and trading positions.
  • Delayed exits can increase loss risks.
  • This strategy is highly risky but can offer substantial rewards if executed according to plan.

Trading without stop losses may be feasible but is highly risky. It's crucial to read and understand the disclaimer and important notes provided above. Risk management should always be prioritized in every trading strategy you employ. Losses are part of trading, but by adhering to strategy rules diligently, the opportunity to profit from trading without stop losses may present itself.


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