Keeping Losses Small
Catastrophic losses can never be
eliminated, but they can be minimized. This is done by risking one point or less
on a trade (for stocks). You cannot stop a stock from gapping overnight in the
opposite direction, but you can protect yourself intraday with these stops. You
will see that taking small losses is the difference between those traders who
make a consistent living and everyone else.
Jeff Cooper, from Hit
and Run Trading II (M. Gordon Publishing Group, Malibu, Calif.).