How effective is using stop loss?

Does stop loss strategy actually work? Also heard that more experienced traders don’t use it. I am kind of confused about whether to use it or not.

Not sure who in their right mind would tell you to not use a SL (Stop loss), if you don’t use one the only way to ensure your account doesn’t blow is by sticking your eyes to the screen. Always use a stop loss, it is there for a reason.

2 Likes

When you’re just starting out, always set a stop-loss to limit your capital at risk.

The only time its justified not to use a SL is when you have graduated to a strategy that demands you do not use one - I can’t think of an example - maybe someone will come along and suggest one - though I still wouldn’t be convinced there’s any need to use such an exotic approach if new to trading.

3 Likes

Love to know who these experienced traders are

2 Likes

Stop loss is very effective for new traders. I suggest using it if you are new in this market.

For everyday retail trading, S/L is effectively protecting you against losing some or all of your money. Bear in mind that there always needs to be a counterparty to effect the stopping price, which ironically is the result of Black Swan price movements - there just isn’t anyone to take the trade at that price !!.

A few brokers guarantee a S/L, but IMO, their other costs, including increased spread cover their guarantee.

Obviously yes ! why wont you use it, do you want to blow up your account?

Ever thought the ‘dont use a stop loss’ guys might have vested interest in you blowing up your account?

For example maybe they are introducing brokers who get paid for new account openings, and don’t care if you make money? Infact the quicker you blow up the better for some of brokers

But whether they are or not, we are NOT traders, we are financial RISK managers.

Rule number one always protect your downside

5 Likes

What I have experienced till now is, when I have placed a long position and applied a SL on it, after some time when I come back, the position is closed with loss and the market is still flashing Green. So at that time I feel like I should not have applied the SL, but it do prevents additional losses.

1 Like

For me stop loss is the most important check in trading. Even the best trading expert can’t tell you where the market will go in the next 5 minutes, in that case if you want to protect yourself from irreversible loss you should use stop loss.

How about using low leverage and wait for the market to go in your desired direction, without exiting trade at a false breakout/spike. There is no need of SL if you are using low leverage. On the contrary using sl can stop you from gaining big. It doesn’t just stop your losses, limits your profits as well.

It sounds like you need to place wider stops and lower your lot size? On what basis are you placing stops?

How does a stop limit your profit? Only where your stops are too tight and are triggered before price heads in your direction would this be true?

Hi @Stefinflamming, Whatever I have heard till now is the opposite of what you have said, quite intriguing, at the same time different from others. Is it not risky? Which broker you use and what generally is your leverage?

stop loss can help you reduce your losses and it is effective atleast for me.

Hi, yes it is dangerous not to use SL if you are using high leverage, however I have been using 1:1 on fxview and Oanda for more than a year. And do note, I use SL when using high leverage but that is very rare.

As such no basis, just my risk appetite

Even while scalping, I do not use SL as I am quickly reacting to the changes, but when I am trading intraday I use SL. It mostly depends on your trading style.

Yes even I do not put SL while scalping.

Yeah I can see that. If you’re just in front of your monitor checking the charts then I guess you can not use SLs but if you’re leaving trades on, it’s absolutely necessary.

1 Like