Stops are a crucial tool in trading. They allow us to control the amount we risk on a given trade and often prevent a loss from spiraling out of control. In fact, I can't imagine placing a trade without a stop. That is how important they are. Keep in mind we are talking about directional trading like we do. There are other ways the markets can be used where stops wouldn't make sense. However, if you are simply speculating where the market will go next, stops are essential. Occasionally there are some traders (who usually have very little experience) that are against using stop orders. There are various excuses these traders use, but there is really one driving force behind a trader's reluctance to use stops. That reason is that these traders do not want to admit the possibility of being wrong. By placing a stop order when you enter the market, you are admitting there is a chance you could be wrong. Of course, traders are wrong all the time. No one wins all...
Comments
Post a Comment