As a Day-Trader you should be good enough that your stops dont get hit all the time. The price moves away from your entry point As far as investing and swing trading i dont know. but no stop loss can allow you to hold a losing position wishing it comes back. Many traders have lost all of there money because of no stop loss.. no exit strategy. as is everything in trading. There is no one thing that works all the time.. It always depends on the situation and the different factors that are involved
If your stops are getting hit too often before the price goes straight to your target, then lower your bet size and increase your stop size by a large amount (2x). Forget having a high risk/reward (R). Most people who talk about high Rs all the time on forums usually can't make money from trading. My R is about 1 and I know plenty of successful technical trader who have an R of between 0.5 and 1 and they do very well. If you find that later you are making money and picking your entries better and hardly going offside before targets are hit, then adjust your stops closer again, but in small increments (10%). This may all sound simple, but it is one of the key elements that transformed me from a breakeven trader to a consistent winner. How you pick your levels, entries etc is going to be somewhat unique to you, so you should tailor your stop placement to whatever 'works' better for you.
When you place a stop you are saying that price is going up unless, at a random point in time, price is at x. When you trade without a stop you are saying that price is going up unless, at fixed points in time, price is higher than x. Let us say that we have been trading based on the weekly chart, price has been closing higher with large bodied candles and every bearish candle that has entered the picture has had a small body. And now lets say that price moves down 160 pips in three hours before returning to its previous levels. Does the magnitude of the drop have anything to do with the direction of the weekly chart and if so then what is accomplished by trading based on a period of weeks? A weekly chart does not dictate that you need a larger stop, it dictates the amount of staying power that you need to make it to the next fixed point in time: stops are not synonyms for staying power. [/B][/QUOTE] Maybe because i am now not a chartist. This is the only explanation for that i am not using a stoploss.
Why are you often right about the market but stopped out just before it reverses and goes your way? I know what you mean, it feels like the market is almost out to get you personally when that happens time after time. I actually once wondered if they were hunting my stops, then I realised I was being ridiculous since I only trade large liquid Forex pairs with small amounts of money, so there would be no point hunting my stops as my positions don't make a dent in the FX market. Now your positions in shares... Actually, I think it's probably the same unless it's a very small cap company. Personally I only trade Forex and the S&P500. I trade Forex with mechanical long-term trend following systems so I don't know if it's any help to you but I've done some tests and come to the conclusion that any stop except a relatively large one will degrade the performance of almost any trend following system. Here's a test http://www.myforexdot.org.uk/stop-losses.html the results pretty much speak for themselves. Tight stops are a bad idea, if you need a tight stop to avoid losing to much of your account on a single trade then you're probably using to much leverage.