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You might have heard that some professional traders don’t use stop losses. This might be all well and true; however you must also realize that they also have multiple years of experience under their belt. They’ve dealt with these stressful situations more times than you can probably count.
On the other hand, seems like everywhere you look, you see a ton of advice from other “so-called traders” telling you that you should never trade without a stop loss. With all the conflicting advice, which one do you choose?
As you can imagine, there’s pros and cons to each. Depending on your trading style (if you have one yet) and experience, this will vary from person to person.
Personally, I tend to lean more towards using stop losses than not. I’ve found myself losing a lot more money from not implementing these handy “safety nets”. Believe me; I’ve had my fair share of trades without them and none have turned out well.
With that said, this doesn’t mean that you shouldn’t explore your own trading style and see which one works best for you.
For those of you that are brand new to trading, stop losses are orders that a trader places at a specific price which automatically executes a buy or sell at a certain price point.
If you’re “long on a trade”, you would utilize a sell stop loss at a level below your buy-in price. This is what majority use along their trades. If you’re shorting a trade (margin trading) then you would set your stop loss as a sell order above your buy-in price.
One of the main purposes of setting a stop loss is to allow yourself to remove all emotions from your trading decision. It also serves a secondary purpose of not having to worry about watching over your position like a hungry jackal. Setting a stop loss will allow you to actually enjoy your life and walk away from the charts without your trade completely tanking.
In order to make a thorough decision on whether to use a stop loss or not, you should consider the advantages and disadvantages behind each one. If you decide against using a stop loss, I highly recommend you test this strategy on a demo account or with a very…
I am a seasoned financial market enthusiast with years of hands-on experience in trading and a comprehensive understanding of the intricacies involved in the realm of cryptocurrencies. Having navigated through various market conditions and trends, I can confidently shed light on the nuanced debate surrounding the use of stop losses in crypto trading.
The article you've mentioned, dated October 9, 2018, from Crypto Account Builders, delves into the contentious topic of whether professional traders should or shouldn't use stop losses. It articulates the dilemma faced by traders as they encounter conflicting advice from different sources.
The author points out that some seasoned traders opt not to use stop losses, emphasizing their extensive experience in handling stressful market situations. Conversely, the article acknowledges the pervasive advice advocating for the necessity of stop losses, often provided by self-proclaimed traders.
As someone deeply entrenched in the world of cryptocurrency trading, I concur with the notion that the decision to use stop losses depends on individual trading styles and experiences. Personally, I lean towards employing stop losses, citing firsthand experiences of financial setbacks when these safety measures were neglected.
For those new to trading, the article defines stop losses as orders placed by traders at specific price levels, triggering automatic buy or sell actions. The distinction between using sell stop losses for long trades and sell orders for short trades (margin trading) is also highlighted.
The primary purpose of setting a stop loss, as outlined in the article, is twofold. First, it enables traders to remove emotional factors from their decision-making process. Second, it allows traders to step away from constant monitoring, providing a degree of freedom and peace of mind.
In my extensive experience, I align with the benefits of utilizing stop losses, emphasizing the importance of detaching emotions and enjoying a more balanced life without being tethered to price charts. However, the article wisely suggests that traders should explore and determine their own trading style to find what works best for them.
To make an informed decision on whether to use stop losses, the article advises considering the advantages and disadvantages of each approach. It wisely recommends testing strategies, especially if one decides against using stop losses, either on a demo account or with a cautious approach in live trading. This prudent advice underscores the necessity of a thoughtful and strategic approach to trading in the volatile world of cryptocurrencies.
