Stop losses. Are they the tools of winners or losers?

Quote from NoDoji:

In my trading, when very small stop losses are triggered and the trade then starts to move in what would've been my favor, I usually get right back in. I used to sometimes trade stocks in a certain direction based on a strong opinion and I would get in right away with a wide stop, or with the intention of starting a position and adding to it if it ran against me. Then when my max loss was hit I'd be pissed and move onto a different stock, or get the feeling I wanted to revenge trade and "get it back".

Now I'm VERY patient in waiting for only the best setups. When I trade the best setups I can place a very tight stop with little risk of getting stopped out and if I'm stopped out, it's pretty much a scratch trade and when I do catch the real move it will more than make up for a few small losses.

One day in early Sept I made 45 trades and lost $500 (I have a very small account and I was normally making 3-5 trades a day at the time). It was death by a thousand stops. All my losses went to max and I cut all my winners short. Instead of waiting for a really great setup I just overtraded.

That day was an eye opener for me. I spent a lot of time mostly sim trading after that, working specifically on patience and stop management. As a result I've been consistently profitable with one losing day ($40) over the past 2 1/2 months.
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Great to hear :). You've earned it.
 
Quote from timewarner2:

Yes, I have redundant systems. What happened after the 50 point spike? Did it come back?? see what i mean?
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When GMCR gapped from 35.15 to 42.25 on 4/30 and ran to 52.75 that day, did it come back?

When MTXX spiked down from 19.22 to 5.48 in a few minutes on 6/16, did it come back?

When AIG ran from 13.50 to 23.00 on 8/5 did it come back?

I imagine if you're extremely well-capitalized, you can hold massive losers for years in the hope they'll come back, but I certainly don't consider that a sign of "strength"; ego-driven refusal to take a loss would be more like it.
 
Quote from increasenow:

no one is seeming to mention this...it is IMPOSSIBLE NOT to place stops is you do not have enough $$$ cash in your account...
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If you don't use any leverage, you may tolerate fluctuations.
 
I don't use any leverage so I don't like them. The few times I've tried them I've been stopped out at the opening bell only to miss a 10% rally that afternoon. I do like trailing stops when selling though.
 
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