$20shoes,
Ahh, thanks for bringing stops back into the limelight. In an earlier discussion in this thread I was heading in this direction when we got sidelined with randomness, or was that random??
I trade without an initial stoploss, or should I say anything that is within cooee of the action. If something goes drastically against me with an initial move, I will plan my exit based on what the market will give.
For example a recent trade that went wrong was a long on AJL at $3.20. This had been in uptrend and then suffered a sideways pattern, then pullback of something like 14 days in a row, meandering back to support, on high volume, on the day I bought. As soon as my trade was executed, the stock went into a trading halt, a couple of days later they announced a suspension of dividend, and the stock opened something like 30 cents lower, then ran another 20 cents on thin volume.
Having a stop in place, would have triggered an immediate large loss of over 10%, (which is why those who think their 2.5 cent stoploss is going to save them, really don't understand how markets work).
My game plan was to purchase more stock into the panic, however as I was not on the computer at the time, this did not occur. After the panic had subsided the stock retraced its ground and a couple of days later I exited at $3.18. The price went higher than $3.20 a few times but there was no liquidity there. I lost only .6% plus brokerage rather than 10-15%.
My thoughts about initial stoplosses are that they are not that important provided you have a plan, which includes what you will do in a variety of market actions. However this probably depends on how you are trading, ie bottom picking, breakouts or range-trading and the probability of winning or sideways action after you have entered.
Make no mistake about what I am saying about getting out of a trade when wrong, just differences on how to do it. I also would normally,( I can't never), have more than about 10% in any one stock, so that the ultimate disaster never costs too much.
brty