It is worth remembering that no speculative trader is obliged to trade Retail FX at all.
Therefore I think the first thing that any trader should do is establish why they are trading in the first place. For some it may be a diversification of a personal investment portfolio, for others a challenge to pit one's wits against a market. Some are looking to slowly and carefully build a capital base whilst others aim for a significant regular income. But some may also be betting their life savings, even borrowed capital, for the chance to break out of poverty into a dream life or give their children a better start to their life. And the impact of various trading risks is very different in each case.
I confess that although I have personally been involved in financial risk management and speculative trading in one form or another throughout my entire career, it was only when I joined BP here a few years back that I started to realise with horror about the näivity, ignorance and totally reckless risk-taking that characterise many, even most, of the newbies that come here - many being totally unaware of even the existence of the most critical risk factors.
Once one has established why one is trading then the next step should be to carry out some form of overall risk analysis whereby risks are assessed and ranked according to their probablility of occurence compared with their impact if/when they are realised.
This is no different to what we do, often even subconsciously, in many areas of life. For example, when we fly to a holiday resort: We do not have to fly, but the probability of a plane crash is extremely low, almost zero, so we go - even though we know that the impact should the risk occur, is almost certainly death. We do the same kind of analysis with decisions concerning insurance for our lives, cars, travel, sickness etc.
The same applies with trading. We could picture it as a matrix something like this:
Anything that is low probability/low impact is not a worry (for example, testing a new method with a few microlots).
Then there is a broad middle field of varying mid-range probability v.impact combinations which would include the assessment of various stop-loss parameters under normal market conditions e.g. unexpected events causing significant moves (such as central bank comments), broker stop-hunting/spread manipulation, too tight stops risk/reward ratios etc.
But then there is the far right of the chart where the impact is extremely high, even critical, regardless of the level of probability - and it is here that we consider the need, effectiveness and value of insurances such as guaranteed stops and equity protection products.
For some, the risk of being in a particular instrument at a particular instant that a black swan type event might occur is small and the impact very painful but not financially decapacitating and equity protection products are not considered necessary. For example, the only longer term positions that I hold in Crude Oil are long positions and if an extra-ordinary flash event occured it would most likely result in a huge upward spike rather than down since supply can be disrupted in an instance but a surge in supplies or collapse in demand take rather longer.
But there are many traders who have small, vulnerable, balances that represent a significant proportion of their total financial situation. And for them, the impact of such a risk occuring is financially fatal, and not just in terms of their trading capital. For such people, these trading insurances should be thoroughly evaluated and, if still not sufficiently reliable as a safeguard to cover their risk then they should not trade at all.