I think what you mean is, since you only paper trade, you feel no emotions since you don't invest real money.
Ever get the feeling that the trad3r is just a walking punch line? He certainly makes for a good straight man...
If your timing is wrong then you should always exit and wait for a reversal; you certainly can handle a huge drawn down but would it be better if you exit and then capture that "drawn down" on the way up? Big drawn down had destroyed a few fund managers trading the Euros last year; while they predicted that it's going to continue to go up, the market kept going down until they can no longer hang on and decided to take a huge lost. This is certainly a big lesson learn from. sg20
The purpose of a stop in an "investment" is to conserve capital that can, and should be, put to better use. If the OP, to use his Rimm example, had a reasonable stop in place, he would have exited before riding the stock to the dumps, and had an opportunity to re-enter at a much more favorable price. His gain at this point would have been far greater. And, he would have had better use of the capital during the period that the stock was crumbling. Even sitting in an account drawing money market interest would have been preferable. And I don't care what criteria you use for a company's "fundamentals", if a stock is down 30%, there is absolutely something wrong with your investment decision, and it is time to exit and reconsider. It should NEVER have gotten to that point in the first place.
Then a simple question about trading tactics rises: if you are so sure (certain) that the trade will go up, why not wait and enter the trade at more advantageous lower risk point? And even then, why risk 10-30%? Instead you could risk small amounts like 1-2% a few times until you catch that move you were certain about.
That is true. I have done that. But there is lot of pain to go around when you are down 20-30% and eventually if the stock is fundamentally right and strong and the market is good, it comes back. I only trade best of the breed and leaders in the best sectors like BIDU, GOOG, FCX, POT, CLF etc. But mostly I have seen William O Neil and other professionals cutting losses at 5%- 7% without exceptions. That may be true also. There is some wisdom there. However profits are a funny thing, now you see your position with $500 ahead and if you donot take it it will be gone next 10 mins. I do take profits rather quickly and promptly and that has been the key in my successful trading career. My losses tend to be rather large like you mentioned but a number of smaller profits overcome them. Loss is when you define a time frame and take it. Profits are illusions on the wall they donot exist unless you take them.
Its mainly the under capitalized day trading account strung together with paper and glue that they trade in and out, and there is no buying power, so they end up liquidating trades that can be profitable the very next day. Its these people who are flocking this forum in and out and close shop. They lose money faster and faster because of narrowed time frames and they end up going back to Uncle Joe's garage pumping gas. I hold positions for few weeks and months when needed and ride out smaller bumps in the road.
I cant tell here if your talking about one stock and letting it go down 30%, or letting one stock take your account down 30%. I've had one stock down 30%, a few times on gaps and other times because I really thought I had a good position. A few times I even averaged down, I've probably ended up breakeven on the practice. I dont think it would be a smart idea to let one stock bring your entire account down 30%, but then again I guess its not much different than if a bunch of trades brought you there, or if one did. I've been in that situation a couple of times (20% +) drawdowns, and I suspect if you want superior returns its unavoidable to sometimes get hit in the nuts.
Try telling that to S2007S who claims that he is LONG a 1/2 position in the "DUG" from April 2nd in the $37 handle.