This is why Stop-Loss is a good idea

No matter how much we analyse and study, we can never eliminate the risk of not knowing something vital, or the risk of simply being wrong. Hence the stop loss.

Mathematically it becomes harder and harder to recoup capital as your ‘unrealised’ losses increase.

Not losing (much) is the first principle of investing.stop loss

I like the “Heads I win Big, Tails I don’t lose much”, (Mohnish Pabrai) strategy.

Original Amount Loss Amount after Loss Appreciation required to recoup the Original amount
100 10.00% 90 11.11%
100 15.00% 85 17.65%
100 20.00% 80 25.00%
100 25.00% 75 33.33%
100 30.00% 70 42.86%
100 35.00% 65 53.85%
100 40.00% 60 66.67%
100 45.00% 55 81.82%
100 50.00% 50 100.00%
100 55.00% 45 122.22%
100 60.00% 40 150.00%
100 65.00% 35 185.71%
100 70.00% 30 233.33%
100 75.00% 25 300.00%
100 80.00% 20 400.00%
100 85.00% 15 566.67%
100 90.00% 10 900.00%
100 95.00% 5 1900.00%
100 100.00% 0 #DIV/0!

 

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