Why I Hate Stop Loss Orders (And You Should Too)



http://optionalpha.com - I hate "stop-loss" orders - and you will too. Once and for all we'll completely put to rest our case as to why using stop-losses actually creates more losing trades with risk defined strategies. And it's not something that you can argue because it's based purely on the math and probabilities. But when it comes to trading undefined or naked option strategies there is one type of stop-loss order that "might" possibly help reduce your risk slightly over long periods of time. Even if you don't use this one particular stop-loss order you'll still be fine and have a very low likelihood of blowing up your account and losing all your money as long as you keep your position sizes small. ================== Listen to our #1 rated investing podcast on iTunes: http://optionalpha.com/podcast ================== Download a free copy of the "The Ultimate Options Strategy Guide": http://optionalpha.com/ebook ================== Still working a day job? Then our "Take 5" segment is for you. 5 mins videos each day on 1 thing you can apply trading options: http://www.youtube.com/playlist?list=PLhKnvfWKsu40z0EnsX0TNqCgUzb8tmM04 ================== Start our 4-part video course (HINT: these videos are NOT posted anywhere else online): http://optionalpha.com/free-options-trading-course ================== Just getting started or new to options trading? Here's a quick resource page we made that you'll love: http://optionalpha.com/start-here ================== Register for one of our 5-star reviewed webinars: http://optionalpha.com/webinars ================== - Kirk & The Option Alpha Team

Comments

  1. What if the internet goes down or something, and you can't babysit the trade, and there's no stop loss, and the market comes crashing down against you?
  2. hi Kirk, quiet follower for a long time. Quick question on stop losses. Hypithethical scenario: SPY is at $x currently. Using the chart I see were in a current uptrend, coming off a recent pullback according to slow stochastic. I chose a credit put spread with say a 20 delta just under the recent support at $x-1. I use TOS also, so we can enter a stop based off of the underlying's price. Could I not enter a stop utilizing the $x-1 price since I know from my analysis, if SPY breaks this support level were typically no longer in an uptrend?

    About to back test this week but just wanted to run the logic by you.

    Thanks in advance.

    James
  3. can you simply not use a stop- loss? just hold on and wait for it to jump and sell? or is that a bad idea?
  4. i think the real reason why u cant use stop lose is that now day with the technologi used and the spik trading stop los are quickly kiiled in ur trading not but normal trading but with the robot trading
  5. I agree,Option Alpha,Stop loss are absolute pain in the ass. it happen to me a lot,especially on a small pull back. the fucking stop loss kick me out my darm trade,it was so annoying.
    I use the slow stoch 14,3 Overbought oversold and the Wielders DMI to monitor my trades
  6. Couldnt agree more.


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