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The Importance of Stop Losses

When it comes to managing wealth most people do not use stop losses. Losses are part of investing, the best investors in the world often say their loss rate can be as high as 2 out of every 3 trades.

So what is the difference between the best investors and average investors? It is the ability to take the emotion of out investment decisions by applying strict stop losses to protect the overall performance of their portfolio.

The simple difference between no stop loss policy and a strict stop loss policy of 10%, is significant:

"To others, being wrong is a source of shame; to me, recognizing my mistakes is a source of pride. Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes."  George Soros

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