Trading without a stop loss is the ultimate recipe for disaster.
Anyone who makes an argument for not using a stop loss order is most likely not a very successful trader. Some will argue that fear causes them to place their stops too tight, so they don’t use them. That may work for a while… Up until they enter into a position that moves drastically against them due to news or illiquidity and they will end up getting crushed on one trade as they constantly look for a bounce to get out of their position.
When you’re trading the only time, you have complete objectivity is prior to entering a trade. Once you are in the trade you begin to lose your objectivity due to emotions. This is why it’s imperative that you not only use a stop loss but determine your stop price prior to entering a trade.
Setting stops is a very underrated and misunderstood concept are in trading. Your stop loss placement impacts your trading performance on so many levels. It decides over the reward:risk ratio of your trades and, thus, determines the expectancy of your trading system. It also determines how adaptable your trading strategy is overall.
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