Thanks Db. After 2 years of trading, I have only recently learned this. I wish I would have read it when I started trading though - where was your book when I started???dbphoenix said:Cutting your losses short has nothing to do with how "tight" they are since an inappropriate stop can virtually guarantee a loss. The width of the stop depends on the setup used. To use exactly the same stop in every case is unlikely to achieve the desired result. A more productive exercise is to determine in advance just exactly what it is that the market has to do to prove you right and exactly what it is that the market has to do to prove you wrong. It is this exercise to which "cut your losses short" refers, plus, of course, the act of actually following through on the cutting.
What you say makes good sense. A quick outline of what I very briefly described above though. I am putting a wide stop as the most I am willing to risk, however, as time progresses and successive prints give me more information I often end up getting out before my stop is hit. If for a loss, it is typically quite small. But, because the stop gives it room I am subject to less noise which is key .
Thanks for your comments Db, only wish I had read them when I first started trading.