Bob Prechter has done a lot of thinking about how to trade successfully. One startling conclusion he's come to: traders should often avoid using stops.
Here's why: If you analyze the market you're trading, you shouldn't need a stop to tell you when to get out of the trade.
In fact, the point of using Elliott wave analysis is to determine where the market is in a wave count, so that you are able to see where the trend is most likely to turn.
Bob Prechter: I think people lose more money on stops than anything else. When a trader suffers five stop-outs at 10 S&Ps contracts apiece, that trader now has 50 points to make up. Every book says to use stops, but it is often a bad idea. Before you recoil in horror, consider that I know a futures trader who steadily makes $200,000-$400,000 every year, and he neveruses stops.
Read the full article at Tradejuice
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