This will likely cause some debate out there from those that read this. We are taught from day one to ALWAYS have a stop loss. Never enter a trade unless you know where your stop loss area will be. From there we are taught to adjust our stop losses as a trade moves in our favor or takes a turn for the worse. The question is, should you skip the stop loss and just wait out a trade and see what happens, or is a stop loss the way to go?

Stop losses are a trap for most investors. There, I said it. If you use stop losses then you are forever adding yourself to the statistics of traders that cannot make any money. Now, let me be clear, I am not suggesting one take unlimited risk, or hold on to a losing position just because you don't want to get out. I am suggesting that you let the stock move around, and yes maybe even move against you, before you decide to cut it loose.

If you are a day trader and you use stop losses you will never have a profitable track record. If you are a short term trader, the same is true for you. You see, you want to know what makes stocks tick. What is their personality and how can you work within it? If you are just putting a stop loss in an area that you were taught to place it then you never learn that this approach may not work on this stock. It may be that a particular stock likes to wiggle around more and that stop loss strategy won't work on that particular stock.

What if there is a larger spread between the bid and ask and the stock simply opens up to trigger your stop loss? See there are so many things to consider it throws traders' mindset all over the place and we lose sight of the real question. Do you think the stock will go higher or lower? Simplify your trading to your prediction, or your strategy setups and leave the stop losses out for now. Once you learn a few stocks that you like you will know where to place your stop losses.