Stop Losses and Trailing Stops: Your Profit-Saving MVPs
Email Subject: RE: “Why am I not making money?!”
Dear “Totally Not a Newbie” Trader,
Thank you for your email where you graciously blamed us for your lack of profits. Here’s an excerpt for everyone else to enjoy:
“Your stock picks suck! I’ve been trading for three months, and I’ve barely made anything. How can I make money when half my trades lose?!”
We hear you, and we’re here to help—but let’s just peek at your trading logs. Ah, there it is: no stop losses, no trailing stops, and every bad trade riding your portfolio like an overzealous rodeo bull. My friend, if you’re not using stop losses, you’re not “trading”; you’re just gambling with extra steps.
Why Stop Losses and Trailing Stops Are Non-Negotiable
Imagine this: You’re playing blackjack, and the dealer gives you an ace and a face card. You win big. But instead of taking your chips, you leave them on the table, hoping for another hand just as good. That’s exactly what trading without stop losses feels like.
Here’s the deal: you don’t need to win every trade to make money. In fact if you think you can win 80%+ all the time, I got a bridge in Brooklyn I can sell you. What you need is a system that ensures your losses are small and your wins are free to run wild. Enter stop losses and trailing stops—I am freaking telling you, if you don’t use these and you call yourself a trader I should reach through this keyboard and back-hand you.
The Math: Winning 60% of the Time but Still Profitable
Let’s break this down with a real-world (well, hypothetical) example.
Scenario: The Trader Without a Plan
- You buy 10 trades, each with $1,000.
- 6 wins: +15% on each = $900 total profit.
- 4 losses: -40% on each (because you held on like a dumdum) = -$1,600 total loss.
Result? You’re down $700 because you didn’t cut your losers early. Congrats, on the big L.
Scenario: The Stop-Loss
- Same 10 trades, $1,000 each.
- 6 wins: +15% on each = $900 total profit.
- 4 losses: -10% on each (thanks to stop losses) = -$400 total loss.
Result? You’re up $500. That’s the difference between some solid beer money and rage-quitting flipping the table at the Starbucks because your mom’s wifi is too slow.
And now for some real world results. For our September picks which have all reached the horizon – our premium service had a 69% Win Rate and those wins had an average 17% gain. Hypothetical meet real world.
How to Use Stop Losses Without Screwing It Up
- Set a Stop Loss Before You Buy
- A stop loss is the price at which you cut your losses. Set it based on how much pain your portfolio can handle—not your fragile ego (or if you have premium we have recommendations).
- Example: Buy stock XYZ at $100 and set a stop loss at $90 (10% risk). If it drops to $90, you sell automatically.
- Use Trailing Stops to Lock in Profits
- A trailing stop moves with the stock price, locking in gains as the price rises.
- Example: Buy stock ABC at $100 with a 10% trailing stop.
- If ABC rises to $120, your trailing stop moves to $108.
- If ABC drops to $108, it sells, locking in an 8% gain.
- Don’t Micromanage
- Set it, forget it (you know, like Ronco), and let the system work. Constantly moving your stop losses because “you think it’ll bounce back” is like rearranging deck chairs on the Titanic.
Why Stop Losses Are Your Best Friend (Even When It Hurts)
Here’s the harsh truth: stop losses will force you to take small losses, but they’ll save you from the catastrophic ones. The goal is to stay in the game, not to win every hand. With a solid stop-loss strategy, you don’t have to sweat the losing trades because your winners will more than make up for them.
The Bottom Line: Stop Being Stubborn—Use Stops
Look, we get it. No one likes admitting they were wrong. But holding onto bad trades because “it’ll turn around” is like holding onto your ex’s mixtape—painful, embarrassing, and completely unnecessary.
The truth is, you can win just 60% of your trades and still come out ahead if you keep your losses small and let your winners run. Play the long game. Stop losses and trailing stops aren’t just tools; they’re lifesavers. Use them, and your portfolio might finally stop looking like a dumpster fire.
So, to our dear complainer: Stop blaming the picks and start blaming the lack of discipline. And to everyone else: Trade smart, set your stops, and keep those losses tighter than your boss’s budget.
Cheers,
The SignalCraft Master Trader
P.S. Our premium service gives you not just stock picks, but recommended stop-loss levels and exit strategies. It’s like having a trading coach that never judges you (well, maybe a little). Sign up today and trade like you’ve got a plan!