Guess that you have to understan that stop loss always helps you not to be thrown away from the market. Of course, some traders believe that stop loss restrict the potential income, because when the position is closed on stop loss, it may push from this position, go high/down and generate an income, however if you're not skilled enough in trading, you would better use stop loss always. It's a good instrument and you should understand that without it you would perhaps not staying on the market for so long. I am always grateful to stop loss, because it saved my deposit multiple times. Try to look at it as at your saver.
How to be okay with taking a Stop Loss?
- Thread starter Valencia333Raul333
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SELL stops can avoid a 50% draw down; even though a fund named ''60% Drawdown'' has done well , in the past, but i dont really keep up with them/LOL.
I still like QQQ some, but it drew down > 80%\ to Less than $20\ in big bear of 2000\2001\2002
This is nicely said. Stop Loss may reduce your profit margin, but it minimizes your loss effectively. So which one is better for you?
Reasons why you should use a stop loss-
1) It prevents losing money more than you can afford to lose.
2) It helps in money management.
3) You don’t have to monitor your trade all the time because it will automatically close your trade if it doesn’t go in the right direction.
1) It prevents losing money more than you can afford to lose.
2) It helps in money management.
3) You don’t have to monitor your trade all the time because it will automatically close your trade if it doesn’t go in the right direction.
Perfectly said.
Imagine the loss that you can incur otherwise if you don’t place a stop loss. You can’t control how the price moves and you also can’t monitor the market every minute. There’s a possibility that you take a break from your trading session and when you return back you discover that the market has thrown you out. To avoid such a situation, the only solution is that you accept that there’s always a chance of losing but if you want to lose less than you've to use a stop loss.
Most of comments on this topic make good points, re stop-loss. I'd just like to introduce another aspect: age & health. As one ages, mother nature has built in various risk tolerance slopes. A young person can lose all his money (I did, as many other traders starting out,) and not take a huge psychological toll, because one is still young, with high risk tolerance, & actually the time to recoup -- and succeed. However, after say age of 40-45, & certainly 50+, one is more "afraid" of losses.
IMO --although supported by various studies -- much is tied to testosterone levels, which decrease with age. Testosterone & DHEA, is very high at age 20; also higher in skydivers, & other extreme risk takers. Studies also show fans at sporting events have higher testost/DHEA if their team is winning.
IMO, that is one of the reasons you find few old & very active traders, although some become "talking heads" on CNBC, etc. This does not include the older traders whom use computer programs, quants, etc, where indiv risk tolerance not as impt, nor those where the active trading is actually done by others. (Does anyone think after decades of avoiding tech --even his friend from MSFT -- Buffett turned colors to buy AAPL?)
Regards,
Just another view.
I'm that rare older active trader. I'm not afraid of losses, I take lots of them very quickly. What scares the hell out of me is big losses.
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Good points; i missed most of his big railroad trades but got plenty of tech trends[ Noting the differerence between a battle tested plan with cuting a loss/business expense; + a younger account blow up
[ iI my case i ground an account down to nothing, with ignorant\ short term trading, that was not near as battle tested as i thought\LOLMature years teach a respect for losses+ risk / which may enable your insurance co to give you a safe drivers discount..........................................................................................