Like a novice trader, Bernard Oppetit does some "if...then..." scenario analysis. In other words, how he reacts if one situation happens, and how he reacts if another situation happens. This kind of plan involves wise stop loss.
"Before establishing a trade, I will decide the countermeasures for various situations. This often involves setting a stop loss, but I always use a mental stop loss, and I will never actually set a stop loss. I know that the best skill of floor traders is to trigger the customer's stop loss. Sometimes I also set a target price, but not often."
Bernard Oppetit mentioned that floor traders often deliberately trigger stop losses, earning easy profits. Everyone knows where the trading public may set stop losses: integer prices, such as 10.
Suppose the price of a stock is 11-13: in other words, the buy price is 11, and the selling price is 13. This price means that the market maker is willing to buy at 11 and sell at 13; on the contrary, the general trading public is willing to sell at 11 and buy at 13.
In this case, the general trading public is likely to set the stop loss sell order at 10, and the market maker can easily estimate this kind of stop loss price. Therefore, the market maker can lower the price to 10-13, eat the stop loss sell order at 10, and then sell at 13. This is why Bernard Oppetit is reluctant to set a stop loss.
"In some markets, setting a stop loss is a good habit, especially in high liquidity markets. Of course, setting a stop loss may also be harmed by market fluctuations. The most important principle is 'Don't deceive yourself'."
"Keep an open mind, and you can change your mind at any time. This kind of flexibility is very important. Don't let the accumulated profits or losses affect your judgment."
"In addition, the ability to admit your mistakes is also very important. Stop loss is useful, it can force you to have self-discipline."
In other words, if you do not set a stop loss, you must have enough self-discipline to exit with a stop loss when necessary. You have to be honest with yourself, conduct an objective analysis, and evaluate whether you should exit.