Thoughts on mental stop-losses vs. hard stops, especially with the current volatility?
Hey everyone, still relatively new to this, and I'm finding myself struggling a bit with stop-loss placement, particularly in this choppier market. I've been reading a lot about the debate between hard, automatic stop-losses and using mental stops, where you manually exit if a certain level is breached.
On one hand, a hard stop takes emotion out of it, which is appealing. But then I see those flash crashes or quick whipsaws that hit your stop only for the price to recover immediately. With a mental stop, you could avoid that, but I worry about letting a losing trade run too far because I'm hoping for a bounce. For those of you with more experience, how do you manage this, especially with $SPY or similar highly traded equities? Do you lean one way or the other, or is it more situational?
It's a common dilemma, and with the current volatility, it's even more pronounced. For newer traders, hard stops are generally recommended because they enforce discipline and protect capital when emotions might cloud judgment. What specific concerns are you running into with hard stops?