The Stop Loss, from anonymous

February 20, 2014 |

The stop loss, if not used properly, will kill by a thousand cuts. It operates on fear — fear of decimation, which is a powerful and justified fear, but a fear just the same. A rookie's desire to keep his losses small will inevitably lead to a host of small losses over a long period of time. But it is hope which will keep him in the game, feeding his account every few months with a few hundreds or thousands more dollars in the hope that some day he will strike it big, all the time netting his broker a tidy sum in commissions.

Fear and hope are powerful motivators but they can inhibit your ability to think straight, which puts you exactly where the professionals want you–making hasty and rash decisions.





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1 Comment so far

  1. jeff watson on February 20, 2014 5:34 pm

    In the grains, I actively hunt stops. Stops become part of the market and are tasty morsels that transfer money from weak hands to strong hands. Anyone who has a stop on an exchange server or their broker’s server deserves to get their pocket picked.


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