A couple of our members mentioned stops recently. I too have had a love / hate relationship with them.
I trade futures as well as ETF's and stops are more necessary with futures because of the leverage, but they have probably cost me as often, or more, as they have helped.
The stop will keep you from taking a loss much larger than you are willing to take on when the market you trade gets away from you quickly, and that is where they act as a safety net. But more often than not, stops get hit just before the market turns back in your favor, leaving you behind or having you chase a position you had already been in.
Where you put your stop is obviously important and technical analysis is a key to that determination. The problem is, the market makers know where the technical stops are likely being placed, and they can make a run at them, particulary in a less liquid trading vehicle.
What say you? Any stories, experiences, or words of wisdom you care to share on the use of stops?
Thanks!