In my book Short-Term Trading Strategies That Work, we created a small firestorm with a chapter that was titled “Stops Hurt”. The chapter showed statistically that stops on pullbacks hurt performance (since publishing this test in the book many others have replicated it). Even stops placed 50% away (which few would even consider a stop)… [Read More]
Are protective stops helping you to make money? Or are you getting stopped out only to see the market then rise to higher levels? The truth is — stops hurt your stock trading performance. Check out this study, which sheds some light on the downside of using stops.
Are there situations where applying a stop-loss serves little purpose? This interview with Ernest Chan explores stop-losses, and why they do not work with reversion to the mean strategies.