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The Way to Trade: Discover Your Successful Trading Personality by John Piper

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Chapter 15: STOPS AND ACCEPTANCE

Are stops necessary?

The first question any trader must ask is “do I need stops?” Stops are very much a two-edged sword, they do a lot of good, but there is a fairly high price to pay. I might be cynical and say that most traders should not use stops. That way they will get wiped out far more quickly and it would save a lot of time and bother.

However my true answer to that question is that I need stops and could not function without them. Partly this is because I trade off chart patterns. There is no fundamental basis for my trading other than market action. When I take a signal, like a failed retest for example, then I must exit when that pattern is destroyed. Always there is a price level at which the ...

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