Originally Posted by lycan
Margin calls happen due to overextension, not lack of a stop loss. You can lose everything while using stop losses, it will just happen one trade at a time, as slowly or as fast as you make those trades. Imagine you are running a retail store. You have credit with which to buy products to stock your shelves. The key is not "to sell at a loss to prevent bigger losses" because the products you are stocking rarely really change. You are selling now hoping to get a better price later on the same product, not to change the fundamental nature of what you are selling. If you are changing your mind that often simply because of volatility you will go out of business. The key is to know the frequency of sales against purchases, your markup, the cost of "carrying" your inventory, etc, and manage your "currency store" properly, instead of blowing all your margin on a product you think will be hot and then seeing the fad go away. All trading businesses work on the exact same fundamental principles, be it Wall Mart or Wall Street. Snerp actually kind of understands this, as his "Tickle me Elmo" post demonstrates.
That's all a bit overcomplicated for me.
I use stops because if a trade goes against me and the reason I took it is therefor invalidated I like to cut my losses and get on with the next one.
You're going against a very important rule that any serious trader will consider a mandatory requirement for long term success. I'm not going to argue with you about it but I'll reiterate Snerp when he says that anyone looking to go into this business please do not follow this advice about not using stops.