The importance of stop loss in trading

I stumbled upon a thread on my local forum and felt the need to bring this discussion here to share my thoughts on trading. Over time, I've realized that a huge issue in trading is risk management. There's this saying, "he who fights and runs, lives to fight another day," which totally applies to my trading style. Using stop losses is key because I'd rather take a small loss and still have some funds left to strategize than get wiped out in a trade just because I was hoping the market would bounce back. In trading, nothing is for sure, and that’s why I believe I haven’t truly won until I’ve cashed out my profits. A lot of traders get too attached to their positions and skip using stop loss, which typically ends with them blowing up their accounts and having nothing left to trade with. That’s just a bad move. Anyone who knows what they’re doing in trading understands how crucial stop losses are for managing their portfolio and taking smarter risks. So, as a trader, do you guys prefer using stop losses, or do you think the market will eventually swing back in your favor?

Stop loss is commonly used by greedy traders that used a very high leverage to trade. These are the kind of traders that will continue to lose in trading. If you have $10000 for trading, do not use more than $1000 which is 10% of your money to trade. Do not use high leverage and be very patient. With this you may see stop lose not worth it. I am not saying that stop loss is bad but risking little amount of money can make you think less of it.

No I don’t agree with your first paragraph that stop loss are use by greedy traders, stop loss has many of its benefits and it’s definitely not every trader that uses stop loss are greedy or use high leverage. Just like you know my stop can be use to actually set out or mark out the maximum amount of risk that I can actually afford to take. Using your example I can categorically use my stop to lose to set a price at a particular price where my strategy shows that the trade would actually be against me to stop me out. Even the same 10% you said one should use for trading I can categorically set my stop loss at that price target and make sure my position size is measured in such a way that even if my stop loss triggers I won’t lose more than 10% of my portfolio just like you said. For someone who doesn’t watches the market like most traders do I prefer my stop loss and profit target with this two either the market goes against me or in favour of my strategy I don’t need to actually be monitoring the trade for closure. I think part of the things that actually causes lots of liquidations is the lack of stop loss use

Unfortunately, the market does not care about your emotions and does not care about what you care about or what you think should happen. This is what makes knowing how to use Stop Losses important and also using them very important. There are traders who over consider their strategy as super effective so they consider less using stop losses or mastering it. Such people will learn the hard way from the market after they get liquidated. For every trader, it may be wiser to first calculate how much you stand to loose to the market, before getting excited about how much you stand to gain.

The whole trading thing is greed. When someone trades regularly, there is a lot of greed in them because they think about their profit in the short term. And when someone thinks about their profit in the short term, greed will work in them, no one can deny it. And leverage trading hypnotizes people to such an extent that people are hypnotized while gambling. And at that time, they try to use all the features starting from stop loss because they want to make a big profit somehow. Leverage trading is very risky and if someone trades with a large amount, it will be much more risky. And at that time, there will be no profit even by using stop loss.

I may be wrong but I am only using my trading experience as an excuse. I used stop loss most when I was beginner in trading, at the time I also use very high leverage. I lost high amount of money but as I continue to learn about trading, I noticed all these are not necessary in trading. Only what I set now is take profit but as it also has advantages, it has disadvantages.

This statement is wrong, and it doesn't portrays the true importance of using stop loss, or the reality of the matter. Stop loss is being used by either an aggressive or a conservative trader, it doesn't matter, and we've seen traders in the same categories not using stop loss, it's all about the trader, their risk affinity and choice. Regardless, stop loss is a very useful tool in trading that will always make your trading properly planned. Though it has its lapses and regrets, still, there's no good risk management without the use of stop loss, as it helps to calculate the right risk-to-reward ratio than leaving the trade afloat. In my trading experience, stop loss has helped me than the cases of lapses. I can't even imagine leaving my account afloat in some volatile asset class.

There are different market scenarios when trading, so when you see positive signs despite of some previous losses, I don't turn to stop loss, but I do finish my trade and wait for the outcome. If its a loss, no regrets, at least I learned from it. That's why its very important to trade on what you can afford to lose because most of the time, the market reaction towards you trade seems unpredictable. You can't control what will be the future, its better to lose with a small amount rather than losing a significant amount that could make you devastated. However, there are also times that you have hints already what will be your trading outcome, especially if you have been losing already consistently. With that, I always use stop loss. I'm not weak, I just want to take chances to prepare myself to do better the next time I trade.

This is more about what you may be using while trading but there are different trading strategies. There are some that do not require stop loss at all. Example is a swing trading having $5000, using $1000 to trade bitcoin with 1x leverage. Such trader will not have it in mind to use stop loss at all. Another example is a scalper that stay on the screen using low leverage and trading good coins like bitcoin. Such trader may decide not to use stop loss but accept losses when it comes. Some traders plan already for a very high volatile bitcoin price with low leverage and trading with small amount of money. Some traders may have $5000, use $500 for trading and decide to average the trade if losing until he use it up to $2500, planning not to use leverage at all. Such trader may accept further losses and close the position if the fall continues. Stop loss is only what some traders think may help them but still see themselves still losing at the end of the day. There is more to trading than stop loss. With what I have noticed, high risk traders are using stop loss, there is nothing special about it, yet most crypto traders are losing. I am still very sure that greedy traders that think they are good in trading are using stop loss. I called them greedy because they use high leverage. It will pay some traders and it will not pay some traders.

Any risk management strategy is very much necessary in trading and it can save a trader from significant losses. It is wrong for a trader to concentrate only on potential profit, without considering potential losses and how to effectively manage and mitigate it through risk management. A lot of traders are rekt through high leverage and its promise of higher profit. But as much as high leverage can give you high profit, it can also greatly multiply your losses and leave you liquidated. Thus it is advisable for traders to apply risk management while trading and they should try as much as possible not to be greedy. A small profit is much better than getting liquidated.

No, I don't see it that way. Contrarily, it's your sole trading style I'm seeing here. You talked based on that, which doesn't capture all situations. From my post, you would see that I generalized things by saying for both high and low risk takers. So, how is this my strategy alone? Well, this is not about the back and forth thing, it's a fact. You can research online on this, and you would see that its always as I said it. Low risk takers are also using stop loss for proper risk management, but it's your choice if you don't use it.

Your post is more about stop loss and not low risk traders and you also posted this: I think this thread should be more about bitcoin, I do not recommend altcoins trading. Some altcoins traders may consider the use of stop loss, the market is too volatile if it is altcoins. I only use like $25 to $100 to trade the altcoins and I do not also use stop loss but I know how risky they are. I do not know much about forex and stock trading and my post is not about both as this is bitcoin trading discussion, although few altcoins can be discussed along. Trading is more than what you read online. Those that are losing also read online about stop loss but they are losing. Trading is more than what you read online because how to make money is more than what you read online.

Not everyone is as prepared and unapologetic when losing everything as you are. And when they see their money liquidated, they end up regretting not implementing a stop-loss. Sometimes, people think too positively, so they hold on to a trade even though it's already exceeded their limit of risk. This is the problem, sometimes they don't want to take a small risk even though a much bigger one is in front of them. I felt this way, feeling a shame about losing a small amount of money and not implementing a stop-loss, even though I ended up losing much more.

Apparently what’s the difference between this trader and the one which uses a stop loss? I think they are same if the one who doesn’t even uses stop loss isn’t much risky because inquiring further losses instead of closing your position is simply just using your emotions to trade as you believed the trade my go back to following your strategy which is definitely part of all what you had earlier described as greedy traders. But for me I could set my stop loss that is shouldn’t be lose beyond $500 but instead of shifting my position until I manually close them I can use my strategy to see where the trade should have a support or resistance if the trade goes against it my stop loss triggers and I don’t lose more than the amount at that position or be delaying my losses by refusing to close. Everyone has there on strategy to manage to risk and yours as worked perfectly for you over the years, but just as setting stop loss doesn’t stop one from losing so as every other strategy out there, I can’t argue that high risk traders do not use stop loss but even low risk traders use it and at the end it works out for them. So nothing is special with using any strategy just be sure it works out well for you and helps manages your risk

I think it is not always about the use of stop losses, and yes, risk management is something every trader must not ignore, which I believe should also be applied to everything we do. What I am trying to say is that a trader cant fully manage risk with only stop losses if the trader is not using the right leverage for each trade. I said this because some traders did well in the area of using stop losses but failed when it came to using leverage due to their greed. Yes, nothing is guaranteed in trading, which is why some people categorize crypto trading as gambling, but if you do a good analysis and follow the right setup, there's still a good chance of the trade being a success. If it ends up a loss, at least you follow the right procedure instead of making a trading decision blindly, but it is the market that's not in your favor. The use of stop loss and break even is something every trader must not ignore.

To use stop loss during trading activities is considered a risk management practice and it is one of the many practices a trader must know before they become successful at trading. Using stop loss isn't to say a trader has failed but it is to preserve capital because the hope that lies in waiting for the market to turn out right is just a mirage that may lead to greater loss. Every first objective of a trader should be to preserve their capital because in economics one cannot make more money if they aren't good at keeping or multiplying the ones they already have. Therefore, every trader should learn to also define their existence point before entering any trade inorder to be safe and secure from further loss.

I'm not a trader but assuming I'm, I will prefer to use stop lose because the market can be manipulated by market makers in such a way that even when price was supposed to go in the analyzed direction, it will be reversed against traders who has place small oders and liquidate them all. During the market market liquidation that happened few weeks ago, similar thread was created to also discuss the need of using stop lose on leverage trading. Because of that incident of liquidation, I encourage the use of stop lose, it useful to reduce a traders intensity of lose.

Not every trader fancy stop lose, since is good ad you losing your capital but in percentage,  so greedy traders are always at the mercy of the stop lose feature to help them prevent liquidation that comes from using high leverage. Let say you use a low leverage of 5x or even below, you may not have to use stop lose or fear potential liquidation since your liquidation pruce will be very far let say $20kBTC as liquidation price. That os almost impossible price for bitcoin at this present point inntime and with the leverage of liquidity that bitcoin have build up so far.

Using stop loss is one of the most important parts of trading and the saying you quoted fits perfectly because in trading preservation of capital always comes before profit when you set a stop loss you’re basically telling the market how much pain you’re willing to take and that limit keeps you in the game long enough to catch the next opportunity. Most traders who refuse to use it often do so out of emotion or overconfidence they believe the market will reverse but hope isn’t a strategy the market doesn’t care what we think it only reacts to price and volume if you let a loss run unchecked it can wipe out weeks or months of gains. A disciplined trader always sets a stop loss before entering a position because it takes the emotion out of decision making it’s not just about avoiding liquidation it’s about trading with a clear plan if the market proves you wrong you exit re-evaluate and come back stronger with better timing and improved strategy.

As a trader using a stop loss is essential because it preserves capital, enforces discipline, and prevents emotional attachment from turning a manageable loss into a disastrous one, ultimately giving traders the longevity needed to survive and capitalize on future opportunities. You can also tighten stops during high volatility, avoid moving them out of fear, and size positions smaller so your stop loss feels like a tool not a threat to your strategy.