Guys, in the world of Wall Street, trading without stops on your investments is like driving a car without brakes.
True, you might survive for a while, but eventually, you’re going to find yourself getting killed!
I don’t care how good a setup looks…
It may have perfect fundamentals, a great story, pristine technicals…
Honestly, it doesn’t matter how good it looks on paper. I will not buy without a stop loss.
Why? Because you never know what could happen.
We’ve all been there and, I know, losses are never fun.
As humans, we are hard-wired to want to be right. It’s just in our DNA.
But as every trader learns at some point, the market is the one that’s always right, not us.
Every major bear market starts with a small pullback.
Even the highest-grade stocks regularly fall by 50%-80%!
Netflix Inc. (NFLX) is down 50% in the last two months and PayPal Holdings Inc. (PYPL) has pretty much been cut in half.
Roku Inc. (ROKU) is down 71% from its highs, and don’t get me started on Peloton Interactive Inc. (PTON) and their recent 86% collapse.
Heck, even Amazon.com Inc. (AMZN), the king of retail, is off by 28%!
Long story short, there is just no such thing as a bulletproof stock.
Investing in AMC
Back in October, I was liking the look of AMC Entertainment Holdings, Inc. (AMC) and bought shares after the stock set up in a textbook breakout pattern.
It was during this time that I showed you the following chart…
After this, I laid out my plan of attack.
Can you guess what happened next?
AMC made a quick pop higher before eventually rolling over and breaking down.
Now, whether you took partial profits on the initial move higher or held the original stop to go after a larger move, you would have long since been out of this trade.
But what if you didn’t take those steps to ensure your financial security?
What if you were so convinced AMC would go higher you just let it ride with no stop in place?
Well, your “diamond hands” would be sitting on a loss of 60% and growing!
The Value of Stops!
Believe me, I get it… It sucks being wrong.
After all, no trader wants to take a loss.
But it’s always better to take a small loss than a big one, and it’s during these volatile times that tools like stops prove their true value.
Embrace the surge,
Editor, Stock Surge Daily