The smartest tip I ever read was: "If you are losing money trading now, cut your lot size five times". And here's an example of why stop losses suck; in fact, this is the holy grail of trading; when to fold them and when to fold them.
the problem with stops
I hope it's clear what I am talking about in that picture.
Going long at the green thumbs up, you would have been stopped at the red x only to see price return to where it was (the purple line). This would have merely made your broker richer, not to mention unnecessarily giving away 40 to 50 pips of your profits, and as you can see price returned precisely to where it was before.
I'll concede that not having a stop could mean that price could keep going down for days and result into a margin margin call. But if that is the case you are overleveraged, or rather, your lot size is too big because a leverage of 1:500 on a lot of 100 dollars isn't going to get you into a margin call on a large enough account, but on a lot of 200,000, that's a whole different story.
This is the crux of the problem. Do we die a death by a thousand cuts and slowly grind away our profits due to volatility (one step forward, one step back), like in this screenshot (and let's face it, this happens all the time, it's what led me to try carry trading in the first place) or do we run the risk of getting into a huge mess with countless positions and interminable waiting? I have to admit I haven't really figured the answer to this. Perhaps someone else has an idea.
When do you call "uncle" in a case like this, because like I said this is what trading is all about (at least to me) (dealing with, or avoiding this type of unnecessary losses).