I have lost all my profits this year for not using a stop-loss

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A stop loss order is supposed to protect you from the price of an asset going against you.

If you buy an asset for $100 and put a stop order at $99 the maximum loss you are going to take is $1 (considering your stop is not skipped, which may happen during a period of high volatility and low liquidity).

If the price goes to $110 and you move the stop to $105 the minimum profit you are going to take is $5 (if your stop is not skipped)

I was doing extremely well during January and February, but recently I was getting angry because my stops were getting caught and I was taking small losses in sequence, so I emotionally started trading without stop losses! That is always a huge mistake!

At the beginning this massively increased my profits, but eventually I lost all those profits, and more, because when you trade without a stop your emotional response is irrational, the price was going against me and I did not stop out.

I had learned this lesson in the past, but once in a while I get greedy and this happens again.

Always use stop losses, even for swing trades.



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3 comments
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Yeah, big difference between trading and gambling and if you are trying to force a trade into profits, it's usually gambling.

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The stop is the difference between gambling and not gambling. It is valid both for trading and for Las Vegas, met the loss limit then just quit.

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