[DesertCat]

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Ed,

With all due respect, this is bad advice for stock market traders/investors. (Unless you are advocating a smaller stop loss) You must have a stop loss, if you hope to make any money long term from the market.


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It may be bad advice for traders, but it's good advice for investors who understand value.

Fundamental analysis tells you what a stock is really worth. You will only buy it at a substantial discount to that value (Graham's "margin of safety"). If the stock gets cheaper after you buy it, why would you sell it? You will either hold or buy more.

The only exception is if you recognize a mistake in your fundamental analysis. If you suddenly realize your stock is actually worth less than the current price, well of course you sell it. You would do that whether it's gone up or down, though.

If you understand fundamental analysis well, and use it properly, stop losses are just a way to get traded out of your best positions during brief periods of price weakness.

If you don't understand the true value of what you are investing in, a stop loss is only partially protecting you from yourself. The only full protection is an index fund, cause you shouldn't be buying individual stocks.