to answer the OP's questions:
when you most need them, stops may not work. they're real good, but you may get screwed.
i always use stops. they're mental - and based on either price, time, or volatility actions - but i always use them. the successful traders i know, both equities ppl and derivatives (swaps, swaptions, exotics, etc.). and it's not always based on the "25c away from my entry point" or something simple like that.
side things:
-> at one point, i believe it was the nyse, tried to ban stops. i don't know if they were temporarily successful.
-> the best move my trading ever took was when i took lower risk entries where the reward was significantly greater than my risk (ie. stop).
i primarily short (almost exclusively daytrade) lesser known equities. on that day in february, i was holding zero short positions later in the afternoon. when the DIA shot down and i couldn't find any reason, i went long. got stopped out of half the position (down 10c), but when it went back through my buy, i put it back on (and a little more). exited by end of day, and went on my way. lucky? sure. but being prepared, i was able to take advantage of it.
when you most need them, stops may not work. they're real good, but you may get screwed.
i always use stops. they're mental - and based on either price, time, or volatility actions - but i always use them. the successful traders i know, both equities ppl and derivatives (swaps, swaptions, exotics, etc.). and it's not always based on the "25c away from my entry point" or something simple like that.
side things:
-> at one point, i believe it was the nyse, tried to ban stops. i don't know if they were temporarily successful.
-> the best move my trading ever took was when i took lower risk entries where the reward was significantly greater than my risk (ie. stop).
i primarily short (almost exclusively daytrade) lesser known equities. on that day in february, i was holding zero short positions later in the afternoon. when the DIA shot down and i couldn't find any reason, i went long. got stopped out of half the position (down 10c), but when it went back through my buy, i put it back on (and a little more). exited by end of day, and went on my way. lucky? sure. but being prepared, i was able to take advantage of it.
