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One very good reason to have a sytem and blueprint to go by.

Montecarlo analysis tells me not many as the return is at the upper end of the 20000 portfolio tests.

This would be clearly shown in the inability to design one.

Back to risk.

Small losses to preserve capital and then get you out of a trade quick enough so that opportunity cost (from loss of time and money in a negative trade) is minimised.

By testing your stop preferably on 1000s of trades its efficiency can be measured and its placement determined.

My tests indicate 7-10% (From intial purchase price) being the most efficient,20% being the level that will less likely be stopped out.But the downside is profits deminish as many stocks languish between the 20% stop and the initial purchase price. (Needs a 40% increase in price from a 20% loss to reach the initial purchase price!).

The whole point in this discussion is that in the end,you have a Business that has an end result of profitability,rather than disjointed segments.

However I would like to touch on a point that Duc brings up quite often with regard to the psychlogy aspect of loss and trading.

This risk I feel can be limited by trading smaller parcel sizes and smaller portfolios. Undercapitalisation and overtrading in my view are the main causes of psychological swings and the inherent RISK of these important elements of Fear---bought about by Greed.

These factors of course can be used WITH those discussed above.