A very important topic Harold. I have struggled with stops for several years - it all depends on what you are trading as volatility is key to setting stops.
I ALWAYS place a stop after putting on a trade. I have been burned thinking that I could be flexible with a stop. A couple of times, I lost connectivity when a storm brought the power lines down. I sweated over that one - learned my lesson tho. Computer crashes can also add to the anxiety. I don't like to be so exposed.
I have been trading commodity ETF's for some time now and I usually use a stop (2% below the prior day's low) which usually works. The worst that can happen is if I am stopped out, I can re-assess and re-enter at a later date.
I know that there are those among us who do not use stops at all. I imagine that they can afford the drawdowns that inevitable occur in this business. But, I want to be able to sleep at night!
I'd be interested to hear what others have to say on this.
Great topic to bring up.
Best,
S