Trading without a Stop-Loss & yet making gains is sheer Talent – Not trying such stunts is Intelligence”. The stop-loss practice is for your own benefit as this provision has utmost importance and is not provided on each trading ticket by the exchanges, just for the heck of it. If the trades turn & move in the opposite directions beyond entry levels, they might further move very fast in a volatile manner & the losses accrued, in the absence of a stop-loss, can be un-imaginable.
There are several things happening across the globe constantly, which affect the price movement, direction & volumes in commodity trading, as basically they move in accordance with demand and supply situations & are also greatly affected by the Geo-political scenarios all over. It is not humanly possible to track each & every occurrence, watch out for economic data’s released all around the globe and understand the level of their impacts on the trade movement & direction of all commodities, though you may be constantly updated on most of the developments, most of the time.
Many times the reaction or the impact of these developments is so quick & enormous, that large & rapid movements in rates are instantly triggered with high volatility, even before the news on these developments reach all over the world. In such a scenario, you may never know as to what level these trades could go to & the losses (though sustainable by a few) may be very large.
These losses are not the only losses that you incur if caught in such a situation – you also miss out on the opportunity, the same commodity is offering, in the opposite direction and also by other trades as most of your attention and funds will now be concentrated and caught up on this particular trade gone wrong. Remember – Growing wealth is important, but safe guarding seed capital is even more important. It’s easier to resist & also absorb losses at the beginning than later.