Read? Portfolio Management - Stop Losses?
Stop losses: Do or Do not. Don't doubt! - Createwealth8888
If you strongly believe in your technical analysis skills and also trust your favourite technical indicators then you should act on good faith, take that stop loss; go home and sleep.
If you are like me don't believe in stop loss, then how do you control the damages to your capital?
Instead of using STOP LOSS to manage risks, I manage risks from different perspectives. I have trained myself very hard to look at Portfolio and not at stocks so a few falling stocks may not impose a big risk to me and don't bother me too. When it becomes necessary; I will write off losing stocks as zero value and take that losses in the Realized P/L. There is no point looking at them as it does nothing to improve your investing skills. Just move on!
If magically the dead stocks somehow resurrect; then I will sell them and write back as profits.
Portfolio = Investing Capital + Realized P/L + Unrealized P/L
= Current stocks + Cash available for investing
There are few important things to note:
1. I don't use any Leverages
2. I am using cash that are not needed for next 5-7 years.
3. I have enough emergency fund.
4. I will only hold on to falling blue chips that Temasek or White Knights are likely to come to rescue
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