Trading With No Stop Loss:
The Risk Management Debate

Should you ever trade without a stop loss? Here’s why some professional traders skip them — and the risk management alternatives they use instead.

Are stops ruining your edge?
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Now that’s an emotive question right…!?
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Before you sharpen the pitchforks 😀, yes, of course I’m a fan of cutting losers. Risk management is non-negotiable.
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But trading is about thinking, testing, experimenting… so let’s poke the bear: maybe hard stops aren’t all they’re cracked up to be.

NO STOPS?

Don Miller — one of the first trading bloggers who documented his $1.6m day trading run — once said: (and I’m paraphrasing here)

“I don’t use stops. I manage risk with size.”

Meaning he only used a hard stop as a last resort, sizing positions so he could manage exits manually.

Larry Connors found that his mean reversion trades performed best with no stops at all.

And random walk theory? It says the probability of your stop getting hit is twice the probability of price actually closing beyond it.

Translation: once you’re stopped, the odds flip to 50/50 of it coming right back. (Not sure I fully buy that… but you get the idea)

At some point, you need to exit a losing trade, that’s a given, but exiting via a hard stop all the time, well, that might not be the best bet.

So, what else can you do?

  • Manual Exit: Watch the price action and close if the trade’s no longer valid. (Disciplined? Great. Rule-breaker? Dangerous.)
  • Time-Based Stop: Review at a fixed time — hold, close, or adjust. Favoured by swing traders.
  • Hybrid: Keep an “emergency” hard stop but actively manage, trim, or exit before it’s hit.

I might have just opened a can of worms here… but it’s worth asking:

Is slapping a hard market order stop on every trade actually helping your edge, or quietly killing it?

Someone’s got to ask the unpopular questions!