Not Using Stop-Loss Orders At All 

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Not Using Stop-Loss Orders At All

The third camp regarding stops advocates not using stop-loss orders at all, primarily because they can interfere with the system being used to trade. At a certain level this thinking makes a great deal of sense. The underlying principle is simply this: if you have a winning system without stop-loss orders, why bother messing it up by getting yourself stopped out of trades that might otherwise end up winners? Just let the system do its thing. Unfortunately, this "certain level" is the theoretical level. And you will find in futures trading that at times there is a chasm a mile wide between theory and reality. This difference becomes most apparent when you actually start trading and get into a position but it starts to go horribly against you, leaving you with two choices:

  1. Stick with it no matter how bad it gets because "my system will be profitable in the long run"
  2. Run like hell

The second choice goes against the way most people think. We are raised to persevere and to fight until the end. However, when engaging in an endeavor that exposes you to unlimited risk, the very qualities that may earn you admiration in other areas of life can cost you large sums of money. The long-term goal in futures trading is to win the war, not each individual battle.

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