Actual data supporting no use of stop losses
- Thread starter wxytrader
- Start date
I've got the OP on lockdown,but it's clear hes not a trader,trades very small,and has an investors mentality...Nothing wrong with that,but it's also why he doesn't employ risk management...
His one trade he posted was in CLSK selling an ATM put,and the stock is down close to 40 percent from the strike sold.
The legendary Bill Miller came to learn after a brutal drawdown that stops and investing were not mutually exclusive, though he was more in the camp of time stops.
one size does not fit all...
His one trade he posted was in CLSK selling an ATM put,and the stock is down close to 40 percent from the strike sold.
The legendary Bill Miller came to learn after a brutal drawdown that stops and investing were not mutually exclusive, though he was more in the camp of time stops.
one size does not fit all...
Last edited:
I think - in theory - a SL can provide value if the distribution of future expected trades changes in such a way that better - again future - statistics can be get from your trades, to make some leverage viable.
Perhaps you can gain value from entering at your stop and exiting using a new.. stop (or not) and hope these returns correlate not well with the initial distribution
Perhaps you can gain value from entering at your stop and exiting using a new.. stop (or not) and hope these returns correlate not well with the initial distribution
There are other ways to manage risk like averaging down for example.
Epic troll, and I hope I'm not killing it by encouraging you to just go all in with MAXIMUM LEVERAGE when you know you're right, and the price just keeps getting better!
An SL isn't free, no. But it is absolutely necessary if you trade big positions leveraged and don't cap your risk in other ways (options provide more advanced tools for that).
SLs guarantee a loss if time goes to infinity. You should exit before then. The reason people lose money on stops is too narrow stops, and maybe correspondingly narrow targets; the trade needs room to do whatever you expect it to do.
If you're fine with tiny uncorrelated enough positions then sure you don't need stops. In fact many professionals do exactly that since it is effectively an edge. Mr. Investor with 1% of his portfolio in company X can take a 99% drawdown on that position without a sweat, if he still think the company is a great investment he can increase his position 100 times easily after such a DD.
SLs guarantee a loss if time goes to infinity. You should exit before then. The reason people lose money on stops is too narrow stops, and maybe correspondingly narrow targets; the trade needs room to do whatever you expect it to do.
If you're fine with tiny uncorrelated enough positions then sure you don't need stops. In fact many professionals do exactly that since it is effectively an edge. Mr. Investor with 1% of his portfolio in company X can take a 99% drawdown on that position without a sweat, if he still think the company is a great investment he can increase his position 100 times easily after such a DD.
Last edited:
A stop loss isn’t a risk management strategy, it’s an exit execution strategy where you pay (excessively) for liquidity. To manage risk you need to think about what your strategy is trying to do and then design some rules around that.
I have been watching a lot of videos on how to set SL and why we should do that and ive been learning a lot about it and then i watch this video here!!! whyyyy