It's scary that the majority response at the moment is ">30% - Whats a stop loss?".
Think about the sheer mathematics of this game, folks;
Pick 1 x 100% winner.
This will pay for 10 x 10% losers
This will pay for 3 x 33% losers
This will pay for 2 x 50% losers
This will pay for 1 x 100% loser
You can have many, many small losers and still be highly profitable. You can't have many big losers before you cannot play any more.
It's not about being right. It's about being profitable.
(ps I've never lost more than about 2% even with slippage on a single position - most of my losses are 0.5% - 1% in size)
Sorry not true.
Like Noika said it totally depends on what you are playing. If they are real speccies a 30% loss is nothing and a 100% gain is nothing. Your maths are incorrect for speccies, (but maybe totally correct for what you play)
In the last few years I've had a 20 bagger, quite a few x10, and many x5 or better. I've also had a 90% loss, one which lost 96%, gained 600% (meaning I was still down 60%) I sold then, and yet it came back to where I bought it from, meaning a 1600% gain from its lows then it stabilised there, I was already out of course. I've had quite a few losses greater than 50%, some realised some still holding. I hold over 30 stocks.
I am in a slow process of trying to work out where to put stops for the type of stocks I trade, at the moment 40-50% is looking like the most profitable point. To make it too much tighter, I would have missed out on many large gains.
Speccy maths. - a real example from 6 months ago.
Bought 4 speccy oil stocks, one a producer, two with defined resources, one w. very good prospects
After 4 months:
1. +500%
2. -20%
3. -40%
4. -60%
Overall result - after $2k in each, started with $8k, now around $13.5k or 60% gain. If you get one good winner in speccies, it can more than pay for 3-4 to lose 80%. As for stops, the 500% winner, dropped 40% before it took off.
All the above stocks are treated as investments rather than speculation, I will still sell quickly if situation warrants it, but holding for a while is the norm.
Just wanted to show another side of the coin.