Stops - Why So Important?

[MichaelD]

Q: Why should you use a stop?
A1: Because you'll make more money more consistently by using a stop than by not.
A2: Because you'll preserve your capital whilst you're learning how to trade.

Q: But I traded XYZ and was stopped out only to see it go sky high afterwards!
A: Stops do that sometimes. However, stops also protect you from a stock which keeps going down. The protective effect on your capital outweighs the whipsaw effect many times over. You can always re-enter a rebounding stock. You can't exit a stock in freefall in hindsight.

Q: What's the best stop?
A: There is no perfect stop, just as there is no perfect entry. A stop which is too close to the price action will take profits quickly, but will suffer from frequent whipsawing. A stop which is too far away from the price action will give back too much profit before exiting a trade.

Q: Aw c'mon, what's the best stop?
A: Your stop strategy determines your trading frequency. Are you a long term trend follower? Use a wide stop. Are you a trader who wants to hold for days/a few weeks? Use a tight stop. As a hint for new traders, your best chance at surviving is to learn to trade longer time frames first, and then consider shortening your average holding time.


Is there interest in continuing this?

 

[ducati916]

MichaelD

Q: Why should you use a stop?
A1: Because you'll make more money more consistently by using a stop than by not.
A2: Because you'll preserve your capital whilst you're learning how to trade.

On the surface, [A1] would seem to be a reasonable premise.
However, the premise only holds true if; the system [methodology] is profitable in real time. If the methodology proves to be a failure, then of course, it will prove to be false.

Premise A2 is also false [assuming for the moment a losing methodology]. Correctly stated, it will possibly take longer to lose your capital utilizing a stoploss strategy.

Q: But I traded XYZ and was stopped out only to see it go sky high afterwards!
A: Stops do that sometimes. However, stops also protect you from a stock which keeps going down. The protective effect on your capital outweighs the whipsaw effect many times over. You can always re-enter a rebounding stock. You can't exit a stock in freefall in hindsight.

Again, an assumption, [pending evidence of the net effect of stoploss whipsaws] that this is in point of fact the case. An issue that can arise in regards to re-entry, is the psychological difficulty encountered in re-entering a stock [sometimes within minutes if you daytrade] of a stock that has just caused you a loss.

Q: What's the best stop?
A: There is no perfect stop, just as there is no perfect entry. A stop which is too close to the price action will take profits quickly, but will suffer from frequent whipsawing. A stop which is too far away from the price action will give back too much profit before exiting a trade.

The closer the stop, the higher [determinatively] the likelihood of the stoploss being activated. This increased stoploss activity carries psychological consequences for the active trader.

Conversely, stoplosses that are quantitatively too far from the price action, carry position sizing, %loss/trade, implications that can undermine an otherwise robust trading plan.

Q: Aw c'mon, what's the best stop?
A: Your stop strategy determines your trading frequency. Are you a long term trend follower? Use a wide stop. Are you a trader who wants to hold for days/a few weeks? Use a tight stop. As a hint for new traders, your best chance at surviving is to learn to trade longer time frames first, and then consider shortening your average holding time.

As a thread teaser, to stimulate discussion, I have no problem with the above statement. As a recommendation, or catch-all strategy, it is fraught with problems. One of which is linking the element of time, with price, without any logical or correlative evidence.

jog on
d998

 

[tech/a]

MichaelD

On the surface, [A1] would seem to be a reasonable premise.
However, the premise only holds true if; the system [methodology] is profitable in real time. If the methodology proves to be a failure, then of course, it will prove to be false.

Premise A2 is also false [assuming for the moment a losing methodology]. Correctly stated, it will possibly take longer to lose your capital utilizing a stoploss strategy.

The point Michael is making is at WORSE a stop will keep you in the game (By preserving Initial Capital). longer.

Again, an assumption, [pending evidence of the net effect of stoploss whipsaws] that this is in point of fact the case. An issue that can arise in regards to re-entry, is the psychological difficulty encountered in re-entering a stock [sometimes within minutes if you daytrade] of a stock that has just caused you a loss.

Stop placement is a little understood and rarley taught (Infact I havent seen anything other than rudimentary stop placement and position sizing discussed anywhere including books). Both Initial stop and Trailing stops. Timeframes need to be considered as does the style of trading.,Fundamental,Technical,Swing trading,Support and Resistance reversal,Pattern trading,Breakouts---the list goes on.

The closer the stop, the higher [determinatively] the likelihood of the stoploss being activated. This increased stoploss activity carries psychological consequences for the active trader.

This is a trader problem not a stop issue.

Conversely, stoplosses that are quantitatively too far from the price action, carry position sizing, %loss/trade, implications that can undermine an otherwise robust trading plan.

This is a lack of Blueprint problem a lack of understanding of performace when a particular stop methodology is adopted.

As a thread teaser, to stimulate discussion, I have no problem with the above statement. As a recommendation, or catch-all strategy, it is fraught with problems. One of which is linking the element of time, with price, without any logical or correlative evidence.

Thread doesnt need a teaser with the 3 of us here!!

Its often thought that the 2 reasons for stops are:

(1) To minimise loss
(2) In the case of purpose placed Trailing Stops--To maximise profit.

Id like to add a third to the discussion. With respect to Placement. Of both an Initial and OR a Trailing Stop loss.

(3) Minimising LOST OPPORTUNITY---refered to as opportunity cost.

Taking the case of the INITIAL stop.In longterm trading you dont wish to have your trade stuck in between a set stop position and your original buy.--The wider the stop the more likely in some trading methodlogies this is likely to occur.
You want your portfolio FULL of performing stocks.
Short term traders want MORE winning trades and dont wish to be trapped in trades which dont move quickly in their favor.

Taking the TRAILING stop.
Same applies ---long periods of stagnant trading can be costly as other opportunities need to be passed up due to lack of funds.
For the short term trader this is the case as well as the chance that WITHOUT a trailing stop in quick outlier moves he may well give back larger amounts of un realised profit than he need to.


The aim is to
(1) Have more wins
(2) Have larger wins that $ risked.
(3) Ideally both (1) and (2).

Correct application of stops (that in itself is an art form.) has the potential to maximise all 3---

Take care of the 3 above and profit will come!

Duc---Do I detect a mellowing indeed perhaps an acceptance for a place in trading for stops??

 

[ducati916]

tech/a

The point Michael is making is at WORSE a stop will keep you in the game (By preserving Initial Capital). longer.

It is a statement of convenience, not of penetrating thought.
To successfully implement a stoploss strategy, the expectancy must be a fact, not a hypothetical.

Stop placement is a little understood and rarley taught (Infact I havent seen anything other than rudimentary stop placement and position sizing discussed anywhere including books). Both Initial stop and Trailing stops. Timeframes need to be considered as does the style of trading.,Fundamental,Technical,Swing trading,Support and Resistance reversal,Pattern trading,Breakouts---the list goes on.

Agreed, and as such a vital component of seemingly the majority of traders, why such a rudimentary and incomplete understanding of the theory?

Quote:
The closer the stop, the higher [determinatively] the likelihood of the stoploss being activated. This increased stoploss activity carries psychological consequences for the active trader.


This is a trader problem not a stop issue.

Incorrect.
Stoplosses lend themselves to quantitative analysis, in exactly the same manner as any other data based methodology.

Its often thought that the 2 reasons for stops are

(1) To minimise loss
(2) In the case of purpose placed Trailing Stops--To maximise profit.

Id like to add a third to the discussion. With respect to Placement. Of both an Initial and OR a Trailing Stop loss.

(3) Minimising LOST OPPORTUNITY---refered to as opportunity cost.

Herein lies an interesting area for analysis;
Viz. does the opportunity cost provided by stoplosses exceed the cost of stoplosses? I am dubious.

Duc---Do I detect a mellowing indeed perhaps an acceptance for a place in trading for stops??

No not really, but I accept that for technically based traders, they [stops] are indispensible, thus, they should be used as efficiently as possible.

jog on
d998

 

[Julia]

Interesting exchange. Thanks for starting it, Michael.
Plenty of us who will continue to find this discussion useful.
Please keep it going.

Julia

 

[It's Snake Pliskin]

Tech described the CORRECT usage of stops as an art.

I would say avoiding the manipulators is the art.

What about profit taking stops vs trailing stops? Care to comment?

 

[ducati916]

Tech described the CORRECT usage of stops as an art.

I would say avoiding the manipulators is the art.

What about profit taking stops vs trailing stops? Care to comment?

The history of the stoploss came from professional gambling & the systems built around card counting. Here, numbers, quantitatively defined the parametres, and there was very little *art* involved.

The stoploss as a tool within the stock-market, and technical trading in particular blunted the quantitative, and introduced a highly qualitative element due to, in a pack of cards, the total number of cards are known, thus as cards are played, the probabilities of various hands can be calculated. In the stock-market, the variables remain unknown, thus probabilities are far more difficult to calculate.

This leads directly to the problem of *where* to place the stop.
How strong in terms of probability is the set-up [support/resistance as an example] and thus how tight or loosely can the stop be placed?

The manipulators.
In the US market they do exist, and are the various market makers.
On the ASX, certainly in made markets, the same probably applies [Options & Warrants] however, there are checks and balances that maintain a degree of honesty outside of daytrades........and even daytrades are not exempt, save for very thinly traded securities.

They will run your stops.
This is a fact of life in the US.
Get used to it.
With the right indicators you can usually, but not always see them run the stops, but on occasion, they know something before every-one else trading the security and you will lose money.

Trailing stops are the only stops that I will implement.
Having said that, they are not without their own set of problems.

jog on
d998

 

[MichaelD]

As can be seen from the range of replies to date, stops mean different things to different people, and there are a wide range of opinions on how to use them.

At their heart, stops are a mechanism whereby you accept that your reason for being in a trade no longer exists. i.e. you either accept that you were wrong about a trade and cut your loss short, or you accept that it is time to close the trade and bank your profits. There are lots of ways to achieve this outcome. Stops are the most concrete way for beginners to start down this path.

The issue I'd like to discuss next is whether or not to place your stop in-market, so that it triggers if intra-day trading hits your stop price.

The major advantage of an intraday stop is that control of taking the stop loss is taken out of your hands. If the stop loss price is hit intraday, your trade will close (subject to some intraday stop loss caveats such as a large gap downwards). There is no issue with your psychology getting in the way of taking a stop loss.

The major disadvantage of an intraday stop is that control of taking the stop loss is taken out of your hands. Downwards price spikes during the day will take out your stop, even though the price may then rebound strongly to the close.

An end-of-day stop is one marked on your chart but not placed in market. You look at the day's price action after the close and decide whether to close the trade the next day.

The major advantage of an end-of-day stop is that it is not affected by the extremes of intra-day price action.

The major disadvantage of an end-of-day stop is that it requires very strong discipline on your part to always execute it the next day. There's always the temptation to hold on if the price rebounds the next day.


So which is better?

The backtesting I have done shows conclusively that an end of day stop works better for long term trend trading. I haven't tested other trading styles in this way. With an intraday stop there is more whipsawing and the system is less profitable overall. (For the more advanced readers, the drawdown is significantly higher.)

What you have to answer for yourself is which method will work better for you. Will you be able to take your stops regardless? If so, use an end-of-day stop. Do you continually find yourself giving a stock "just one more chance" to recover? Use an intraday stop.

 

[ducati916]

i.e. you either accept that you were wrong about a trade and cut your loss short, or you accept that it is time to close the trade and bank your profits.

Q: But I traded XYZ and was stopped out only to see it go sky high afterwards!
A: Stops do that sometimes. However, stops also protect you from a stock which keeps going down. The protective effect on your capital outweighs the whipsaw effect many times over. You can always re-enter a rebounding stock. You can't exit a stock in freefall in hindsight.

Herein lies the problem.
Stoplosses tell you nothing about the security.
They tell you nothing about whether your analysis was correct, or incorrect.
As soon as you attach an emotion to a stoploss [right/wrong] you are mis-using the theory.

There are lots of ways to achieve this outcome. Stops are the most concrete way for beginners to start down this path.

I can think of two or three ways.
All of them are superior to stoplosses.
However, as you broached the subject, you can expand the discussion if you so care.

jog on
d998

 

[tech/a]

God you guys so much to cover!!!

The stoploss as a tool within the stock-market, and technical trading in particular blunted the quantitative, and introduced a highly qualitative element due to, in a pack of cards, the total number of cards are known, thus as cards are played, the probabilities of various hands can be calculated. In the stock-market, the variables remain unknown, thus probabilities are far more difficult to calculate.

In my case and Michaels there is definately a quantitive known when applying a stop to a trading system.The results will be markedly different relative to the stop placement.Using T/T as the example stop placement from 10% of initial purchase to 20% will decrease number of times stopped.It increases nett profit.Increases Drawdown and Gives anything BUT a smooth equity curve.
Cutting it to 5 % decreases everything but the number of times stopped and smooths the curve.In the end a balance is found I choose 10% as its easy but 8% is the optimum.
The stop itself has nothing to do with the analysis and everything to do with Initial capital preservation, and maximisation of opportunity.

This leads directly to the problem of *where* to place the stop.
How strong in terms of probability is the set-up [support/resistance as an example] and thus how tight or loosely can the stop be placed?

In a discretionary trading application there are two distinct issues here.
(1) Really its not important for the same reason as shown above and
(2) Michael answered it nicely--in terms of an INITIAL STOP--At their heart, stops are a mechanism whereby you accept that your reason for being in a trade no longer exists. i.e. you either accept that you were wrong about a trade and cut your loss short,

The manipulators.

Where there are no Market makers or futures funds or huge players like banks,manipulation of stops in shares is highly un likely,its simply too big for even big fish punters.

An end-of-day stop is one marked on your chart but not placed in market. You look at the day's price action after the close and decide whether to close the trade the next day.

For EOD trading,for stops,initial and trailing and for exits I prefer CLOSE below X point. It evens itself out with slippage to the downside and slippage to the positive over time.

Herein lies the problem.
Stoplosses tell you nothing about the security.

They dont have to.

They tell you nothing about whether your analysis was correct, or incorrect.

Again they dont tell you that its wrong or right they are simply a line in the sand where YOU the analysis says at that point I no longer feel my analysis is valid on this move. See my AIM stop at 21.5c on that thread.The stop says nothing but price at 21.5c will say something to me. Price action beyond my sell if it comes to that will have no interest for me,other than possible further opportunity to do it all again. If it goes to sleep then I lose interest very quickly.

As soon as you attach an emotion to a stoploss [right/wrong] you are mis-using the theory.

True its a line like that at a stop sign.I stop at it!! If I dont I run the risk of being injured or Killed.
After I stop at it and then move on I no longer think about the stop---it has served it purpose.

Think about this analogy and the implications of not taking the stop.
The results are similar to the stop market. How lucky do you feel punk---was it 6 shots or seven???

I can think of two or three ways.
All of them are superior to stoplosses.
However, as you broached the subject, you can expand the discussion if you so care.

I lookforward to these Duc,when your able to share. Im certain you'll have loads of stats.
With all due respect your work in progress is a great example of failure to implement a stop. (Yes I understand your methodology---and yes You know I think your snafoood re making 30% a year).
By simply taking a 10% stop in your trades your profit would be dramatically different and your opportunity to allocate funds into working stocks IE profitable----would be dramatically enhanced.You have massive funds chewing up the profit gained in 40% of your trades.Its not working for you!

The benchmark T/T has achieved its 30% gains already for the year with a few stops along the way. Sure its open profit as your have open loses.
If both portfolio's were sold Monday you have a nett return of 1.95%---- I 30% plus a bit.

 

[2020hindsight]

God you guys so much to cover!!!

tech - thanks for going to the trubel of explaining stop losses so thoroughly - whether or not I agree lol truly appreciate your efforts - If I disagree, it's purely becos you're swimmin in the deep end of the pool , and I'm still in the beginner's pool lol.

The rest I'll post this in small print - consider it trivia .
personally I dont use stops - just have to fall back on old fashioned buddhist work ethics and patience - wait till it comes good again lol -

I'm probably the only bloke to lose on KZL - but that was cos I came in in May - and got out when it went down ( equivalent to stop loss I guess) fortunately I got back in thanks again , 2020

PS I ask experts "stop losses" - why would you use em ? they say - NEVER reward stock that is heading down by holding it ... THEN I mention the example of KZL - they say - ahhhhh that's DIFFERENT lol

 

[constable]

Tech/a have got a theory to try and prevent stopping out.

- fixed fraction loss for portfolio is $500
- average daily trading range of stock say in auz's case is 7.4 ticks - 3.7 up 3.7 down
- buy on this ocassion is executed at 2 ticks above yesterdays close of $.078 therefore at $.080
- therefore it is 5.7 ticks up from bottom of trading range (078 -.0037) = .0743
trade would go as follows

$500 prepared loss
divided by $.0057 (trading range)

equals 92592 shares that can be purchased that can trade down to bottom of trading range before being triggered by fixed fraction stop loss.

Is this something new (probably)or has it been done b4 ? what r your thoughts?

 

[tech/a]

Constable.

Setting your stop and as such your risk can be calculated in 1000s of ways.
Yours is one way.

In AUZ's case the obvious stop is 1 tick below last Thursdays low..066
Risk is .007.or 72000 shares (by the way the $500 would need to be the trade risk not the portfolio risk or Portfolio heat.) This would be my way using Bar analysis.

Portfolio heat is the accumulation of risk on all trades in your portfolio if all were stopped out at the one time.If placing a stop in an arbitory fashion then Portfolio heat maybe an issue,as would the number of trades in a portfolio.
10 trades with a 5% total risk would be high.

But then we are beyond this discussion.

 

[MichaelD]

Is this something new (probably)or has it been done b4 ?

Setting a stop like this based on a stock's daily range is not new and indeed one excellent way to set a stop - but not necessarily so close to the daily trading range. You're approximately describing Average True Range which is a measure of recent stock volatility, and setting it this close would have something like a 30% chance (from memory) of being stopped out by random price movement. Will post more on a few popular stops including ATR soon.

 

[nizar]

In AUZ's case the obvious stop is 1 tick below last Thursdays low..066
Risk is .007.or 72000 shares (by the way the $500 would need to be the trade risk not the portfolio risk or Portfolio heat.) This would be my way using Bar analysis.

tech,

whats your view about not setting your stop in an obvious place? does it really matter?

 

[Bobby]

With all due respect your work in progress is a great example of failure to implement a stop. (Yes I understand your methodology---and yes You know I think your snafoood re making 30% a year).
By simply taking a 10% stop in your trades your profit would be dramatically different and your opportunity to allocate funds into working stocks IE profitable----would be dramatically enhanced.You have massive funds chewing up the profit gained in 40% of your trades.Its not working for you!

The benchmark T/T has achieved its 30% gains already for the year with a few stops along the way. Sure its open profit as your have open loses.
If both portfolio's were sold Monday you have a nett return of 1.95%---- I 30% plus a bit.

Tech,
I do agree with you about Duc's trading methodology, what I don't understand is why he chose this path, Duc is no fool ~
Got to be an answer?

 

[ducati916]

tech/a & Bobby

In my case and Michaels there is definately a quantitive known when applying a stop to a trading system.The results will be markedly different relative to the stop placement.Using T/T as the example stop placement from 10% of initial purchase to 20% will decrease number of times stopped.It increases nett profit.Increases Drawdown and Gives anything BUT a smooth equity curve.
Cutting it to 5 % decreases everything but the number of times stopped and smooths the curve.In the end a balance is found I choose 10% as its easy but 8% is the optimum.
The stop itself has nothing to do with the analysis and everything to do with Initial capital preservation, and maximisation of opportunity.

I can accept this, and having witnessed the results so far, it would seem to be a satisfactory compromise. The stoploss was tested along with entry and exit criteria and any other parametres that were additionally tested.

Again they dont tell you that its wrong or right they are simply a line in the sand where YOU the analysis says at that point I no longer feel my analysis is valid on this move. See my AIM stop at 21.5c on that thread.The stop says nothing but price at 21.5c will say something to me. Price action beyond my sell if it comes to that will have no interest for me,other than possible further opportunity to do it all again. If it goes to sleep then I lose interest very quickly.

Stoplosses for the trader imply some fascinating psychological inputs.
Analysis, does not exist for a chart trader, hence the requirement for a stoploss. Chart set-ups are entry & exit triggers, traders should realize that no form of analysis is undertaken, nor required.

If a trader undertakes analysis, suddenly we introduce a psychological bias.
This psychological bias will at crucial times conflict with the theory of stoploss. With conflict we introduce conflicted decision making, which is a whole new subject area. In brief, it is this conflicted decision making that causes some of the blow-ups that traders [investors] encounter.

If it goes to sleep.................
Previously mentioned by tech/a was the concept of Opportunity Cost.
Opportunity cost ties in [psychologically] very closely with the idea of fast money. Fast money in the market is very alluring, but rather difficult to execute. The ubiquitous stoploss is in essence a tool designed to provide [in theory] fast money. It does so rather obviously by exiting you from trades that are not making money immediately, and placing you in trades that are.
That's the theory.

Quote:
I can think of two or three ways.

All of them are superior to stoplosses.
However, as you broached the subject, you can expand the discussion if you so care.



I lookforward to these Duc,when your able to share. Im certain you'll have loads of stats.
With all due respect your work in progress is a great example of failure to implement a stop. (Yes I understand your methodology---and yes You know I think your snafoood re making 30% a year).
By simply taking a 10% stop in your trades your profit would be dramatically different and your opportunity to allocate funds into working stocks IE profitable----would be dramatically enhanced.You have massive funds chewing up the profit gained in 40% of your trades.Its not working for you!

Quickly addressing the first point, which goes to the previous point regarding fast money, I as an investor, am as partial to fast money as the most avaricious trader, however, I am also after five years in the market also risk averse, and stoplosses represent higher risk than I am willing to bear.

What are the alternatives, and why is my public portfolio looking the way that it is?

First, the public portfolio is a reality check for all the newer market participants believing the hype from the peanuts [as is tech/a public portfolio]
There are not that many that post live trades, and, follow them through to their conclusion over longer periods of time.

TT has been running approximately 4yrs now.
Mine is at 11mths.

By simply taking a 10% stop in your trades your profit would be dramatically different and your opportunity to allocate funds into working stocks IE profitable----would be dramatically enhanced.You have massive funds chewing up the profit gained in 40% of your trades.Its not working for you!

As previously mentioned, the idea is to have zero losses, hence the no stoploss model. To run over a three year time period, and to aggregate 30% compounded. Currently, I see no requirement to modify the plan.
This was not intended to be fast money, it was not designed to be fast money, it was designed to be safe, and reliable over all market conditions.

Market conditions play an important role in any methodology, and will change quite dramatically stoploss parametres.
TT will perform best in Bull markets, and possibly ok in a Bear, time will tell.
Mine, will perform in any market.

The benchmark T/T has achieved its 30% gains already for the year with a few stops along the way. Sure its open profit as your have open loses.
If both portfolio's were sold Monday you have a nett return of 1.95%---- I 30% plus a bit.

An interesting contrast.
TT has open profits and realized losses [10% stoplosses realized]
I have realized profits and open losses.

If the market corrects hard, as we had in May, TT's profits could shrink, my losses could grow. The outcome would be thus;

TT has stops hit, exiting trades, reducing profits.
I have increased drawdown, no action taken.

TT responds to market risk via stoplosses.
Market risk is irrelevant to my model, I evaluate economic risk.

Returning to the fast money paradigm.
The investment portfolio is one part of a diversified investment program.
Diversification in strategies becomes one of the *better* ways to manage risk than utilising a stoploss.

So what are [is] an alternative?

Again, as previously mentioned I am an Arb.
This suits my need for analysis [psychological weakness/strength]
It is risk free, which is far superior to a stoploss.
It is fast money, timeframes [holding periods as low as 2mins]
It generates 5%-9% per trade.
It can be massively leveraged [as it is risk free]
Profits fund my longer term investments.

LBO's
Currently trying to get on the ladder.

Bankruptcies.
Again previously mentioned.

jog on
d998

 

[constable]

Is this something new (probably)or has it been done b4 ? what r your thoughts?[/QUOTE]

Sounds quite conceited ! Was actually ment to read "probably not"

 

[noirua]

Those who rarely use stop losses tend to suddenly start trading for the long term. We have all seen these posts after a stock suddenly falls out of bed.

If you are a trader who needs a stick of dynamite to make you sell then a stop loss is vital. If you trade a reasonable number of shares then you can set different stop losses for each parcel of the same stock.

One favourite method, which I am using with one stock, is to put in a selling price for different parcels. One parcel sold at $3.60 and the second at $3.70, and I have prices set all the way up to $4.50 in eight more parcels. All you have to do is state how many shares you wish to sell and the minimum price and the order remains for 28 days. If you keep on your toes you can vary or cancel at any time or and add trailing stop losses. Market depth often shows up the plans of some in less traded stocks but is harder to spot in the likes of the ASX 20.

There are many variations of the above on buying and selling that can act in a bullish or bearish vein. The orders can remain either on or off screen.

 

[ice]

This debate is too esoteric for me. However I will make two comments.

1. However you evaluate and set stoplosses they are only relevant if if the trader follows through and executes them. Often not the case in traders I have spoken to.

2. Executing a s/l doesn't only protect capital, it also frees one from from the psychological stress of being in a losing trade. Freeing of this pressure generally permits traders to better evaluate and execute the next trade(s). At least that's my own experience.


ice