Why Traders Need Stop Loss.

Trading decisions are often made with technical indicators. For example, on my screen, I have an indicator called the TA Insync. I smooth it to reflect a trend rather than just momentum. A buying opportunity comes when the indicator turns up and / or the indicator cuts above its signal line. reverse for selling. It is just like the MACD. Sometimes, in a fast moving market, prices will suddenly go against me, the trader. In such cases,the change of direction in indicators will follow, but after a few price bars. To protect from this 1 in 10 occurence, it is important to have a stop loss in place, always. If we do not have a stop, then a sudden change in prices will make the trader into a frozen rabbit – unable to move while the market goes against him.

I am showing the chart for 60 minute SIlver where a sudden waterfall decline left the indicators behind. A stop loss is neccessary to protect traders from sudden events.