Stop loss orders? You don’t need them. Here’s an alternative. / Stock trading Stock market explained


Stop loss orders? You don’t need them. Here’s an alternative. / Stock trading Stock market explained, stop loss stocks, stop loss order, stop loss in trading, stop loss order explained, stop loss order example, stop loss options, stop loss on option trade, stop loss sell order, stop loss strategy, stocks stop loss, limit order, stock market stop loss welcome to looking at the markets with David Moadel you know I wanted to talk about stop losses today I’ve made videos about stop losses and where to place them or where I i personally place them and I don’t want to give the wrong impression because you don’t have to use stop losses believe it or not yeah okay so let me let me read this to you and I’ll explain while I go along I’ve heard some stock market gurus say that you must always set a stop loss order with your broker for every trade that you do as usual the gurus are wrong if you use a small position size in your trade then you don’t need to set a stop loss order now when I say use a small position size I mean you’re using five percent or less of your trading account on the trade in fact using less than five percent is even better for example you can use just one percent or two percent if you use a small position size then it’s not the end of the world if you lose a hundred percent on the trade think about it is it really any riskier to buy a two-hundred-dollar call option and not use a stoploss order compared to buying two thousand dollars worth of call options and setting a 10-percent stop loss order it’s not any riskier because either way your maximum loss would be exactly the same two hundred dollars when you buy a stock or option + use a small position size you have a built-in stop loss because one hundred percent of your purchase is the most that you could possibly lose on the trade it might sound drastic to lose a hundred percent of your money on a trade but it’s not really drastic since you’re only risking a small amount of money and there’s a big advantage to using a small position size instead of using a larger position size with a stoploss order the markets will often give you head fakes in which a stock will swing downward triggering your stop loss order and causing you to take a loss and then swing upward causing you to regret exiting your position for a loss because you could have stayed in the trade and made a nice profit instead if you simply use a small position size and don’t put in a stop loss order and just ride it out when the stock price swings downward you could avoid getting head faked by the market and i’d like to show you what that looks like in a chart here this is a a daily candlestick chart for apple and imagine if you bought here right and then you know you bought a call option or call options spread or just bought the stock well if you buy here here’s a head-fake the market swings downward and if your stop loss is here you would have gotten stopped out and you would have taken a loss on the trade and you know what happens a lot of the time right after you get stopped out the market goes right back up and up and up and if you read it if you had just stayed in the trade just ride it out not only would you have broken even but you would have made a nice profit here’s another head fake on the same chart if you had bought here you buy here the market goes down that’s the head fake and if you had gotten stopped out here if you would set your stop loss here you would have taken a loss you lost money but then what happens after the head fake a lot of the time it goes up and up and up and if you had just stayed in the trade and not set a stop loss again you could have made a nice profit here now I’m not saying that this is a perfect method because there’s no such thing I’m only saying that the market gurus out there are wrong once again when they claim that you absolutely must set a stop loss order with your broker whenever you place a trade alright so I hope this is helpful and I hope I showed you an alternative to the you know common knowledge suppose it common knowledge of these stock market gurus out there and I i wanted to present you with an alternative to stop losses I don’t always use stop losses in fact a lot of the time i’ll buy a call or a call spread a small amount on the trade i’ll use a small position size and i’ll just write it out because I’m comfortable I’m very comfortable with the amount of money that I’m risking on the trade and so a stop loss is not always necessary if you set it up correctly and if you’d like more help you can email me David Modell at any time my email address is David Modell @ gmail.com if you like this video if you found it helpful please give it a thumbs up on YouTube and leave comments also please subscribe to my youtube channel if you haven’t done that already so you can receive the latest updates on my financial educational videos thank you so much for watching this I appreciate it and I’ll talk to you soon

41 thoughts on “Stop loss orders? You don’t need them. Here’s an alternative. / Stock trading Stock market explained”

  1. great point on saving your trade from a head fake. I have lost a lot of trades setting stops on stock positions. yet another reason to focus on options.

  2. Hey David, how come almodt all the marijuana stocks seem to be going up right now? I'm doing pretty good in the stocks I havr

  3. Should i use wide stop loss in long term normal stock investing like 30% or 60% or is any stop loss a bad idea in long term investing.Does this advise in this video apply only to short term traders.

  4. Agreed completely! From experience with stop losses in the Forex market, most of my trades were losing and I would always get psyched out by head-fakes instead of staying in the trades. Now I just trade with small positions, no stop losses and wait it out and WALL LAH! I've been making consistent profits.

  5. Yes , unless you are caught at the absolute top or bottom , you will usually recover to at least break even … NOTE you still DO need to set a stop loss , otherwise you can't guarantee your only risking $200 if you have more than that in your account / credit etc ….

  6. Very true and I don't take more then 1% and use the Take Profit. So, I go to sleep and in the morning I usually have the profit, not much but every day the same is ok …

  7. I think it is funny to risk 1% – 2% unless, or even 5% unless you have a really big account.

    WIth it costing $6.95 to buy + sell, on $200 investment you have to make up for 7% before you can make a penny.

  8. for earning 200 bucks you need 100% return on investment… whereas if you invest 2000 you just need 10% returns.. which one is easier to achieve?

  9. Totally agree but would advise people to have caution and only NOT use a stop loss if you're actually keeping an eye on your position, as you know how much money you're prepared to lose if the market moves against you so you are able to manually close the trade. If you like my advice pls email me, i am only 6months in and looking for spreadbetting traders to share ideas with [email protected] my email address

  10. Wouldn't you make more money with $2000 and a 10% stop-loss than with $200 with no stop-loss?
    In both cases you're gonna lose $200 if the trade doesn't work, but if it works $2000 is gonna make you more money than $200

  11. Only other good reason for a stop is that it lets you exit the position and enter other trades which may make money more quickly.

  12. Great video! Yet another example of how we've been lied to YET again ( stop losses are a scheme to take your money) If I spoke to a 100 random traders, about their stop losses – they'd say time and time again, I got stopped out, yet again to see the market, go in my intended direction. As usual though, the general public believe everything they've been told!! ( moon landings l.o.l)

  13. I hear you, David. I've made some great money in CryptoLand and the only time I've felt I lost was when I was stopped out. My best profits have come from holding a trade through the silly dips and selling high, of course. 🙂 Thanks again for a great video.

  14. You are right! I got stopped out and then the market reversed..missing good profits. Bit on the contrary..you can get passed your 2-5% margin on your trade of the market price goes way past your risk percentage.

  15. Using small position sizes equal to 1-2% of acct. makes more sense than using stops where market makers can take them out all day everyday. Game changer. Thanks. 😀

  16. Interestingly, Peter Lynch in his book says the same thing about stop losses, “I’ve always detested “stop orders”, those automatic bailouts at a predetermined price, usually 10 percent below the price at which stock is purchased”. And he gives the same reasons as you outlined in your video, Dave. Another great video to watch and something new to learn. Thanks again, Dave!

  17. You are so right. Broker companies just wait until you place stop loss. This is how they make money. Most hardest part in trading is GREED & Desperation. Time and timing is very important. I never use stop losses.

  18. This came up after the one I just watched–5.19.19 Very helpful. I don't like stop losses for exactly what you mentioned inside. Thanks for making these videos. I am waiting for a big drop in $AAPL to get back in. I had been in long, since $99.00 yrs ago and ended up selling not at all time highs but was a great one!

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