Yeah, I would never let it get there. I try very hard to keep my "Holding-onto-a-Loser Time" to a minimum. Each extra minute you hold onto a loser is a minute wasted to get in on a winner. Just like everything else, stops depend on what kind of a trader you are and your position relative to the account size, etc.
alex, yes, trailing stops after profits makes sense. the original post here is talking about fixed price stops set at a loss prior to entry.
Stop loses are a crucial part of money management..... i had 14 loosing months in a row before i began making some $$, during that whole time my account was never down more than 6%...why?...because of sound money management and stop loses. Cramer is the only famous trader i know that says stop loses are for loosers....but than again he doesn't trade off charts.
There are no traders who don't use stops. Every trade has a point where you will eventually get out if it goes against you. This is your stop. Otherwise you are just gambling your entire account on every trade. Now, I have seen many traders who do not use the same percentage, dollar value, point count, etc. as stops and have very wide stops, that actually make money over time. But that's a different topic, right ?
Who watched Mad Money yesterday? I'm scared by the fact that Cramer is crazy about Cisco which I also like very much. I'm waiting for my signal to get in, but now I'm afraid because of Cramer.
illiquid. I am glad you too think that tight stop losses increase performance. On the other hand, i had a better thought about this. When i was starting out, my mentor forced me to put a 20 pip stop and have a 1/2 to 1/3 - loss/profit ratio, so that i could chase trades that only guaranteed me a least 45 pps in profit. I think it is a jump start technique that would get you started well... Dunno.... just a thought. Anyways, KNOWLEDGE is power so ....
Anyways, using stops without having a resistance or supply line to judge the whole thing after is a little risky. I am trading the FX and using pivot lines, and always having lines drawn halfway between S1, S2, S3, R1 etc... You wouldn't imagine the times that price goes from one of these lines to another... They really pay off. So basically, when i am going long, i try to put a stop loss under a support line and the amount depends of the pattern it did there, the force of the downtrend that brought it there and also the volatility...
For instance my trade now on the Euro, went from 1.2030 to 1.2100 and i am still in the trade with just 15 pips stop loss because of that hammer that appears just at S1... neat, eh?