It is interesting to contemplate what the use of a stop loss has meant to my own personal trading over the last 12 months - the value of a stop loss has certainly been self-evident over the last 12 months of trading conditions for long term trend following systems (it isn't something that I need to prove to myself, but perhaps this post will help someone else "get the message").
Some of the highlights of my last 12 months of trading (the key messages of what these numbers mean is covered later in this post);
MGQ (now GMG) - sold @ 6.63 for a large profit, currently 3.85
SLX - sold @ 10.60 for a large profit, currently 5.55
BNB - sold @ 28.61 for a modest profit, currently 13.96
CBA - sold @ 54.02 for a small loss, currently 39.35
APN - sold @ 5.69 for a small profit, currently 4.80
PXS - sold @ 3.65 for a small profit, currently 2.42
Currently open and fully pyramided positions in;
CEY - bought @ 3.21 - 3.48, currently 4.40
IPL - bought @ 120.12 - 149.54, currently 158.00
MCC - bought @ 9.62 - 10.82, currently 12.75
Along the way, there have been lots of small losses and small gains, BUT NO LARGE LOSSES.
THE TAKE HOME MESSAGES
1. A stop loss prevents a small loss from turning into a large loss. That's its function. Occasionally it will give you a small loss in a share which then turns around and runs up without you. DOESN'T MATTER. A small loss will not hurt you. A large loss will.
If I had ignored any of the stop losses I had in place over the last 12 months, my trading capital would have been decimated. Instead, it's increasing even in these conditions.
2. Combining a stop loss with letting your profits run makes it mathematically inevitable that you will make a profit in the long run. I've had three big winners in the last 12 months; SLX, WOW and MGQ, and they have MORE than paid for all the small losses along the way.
It's not clever. It's not pretty. I can't boast about my stockpicking skills...but I am making profits and not hurting like many here.