Of course, the poor sods who had their stops blown don't get their money back -- the recreated wealth winds up in someone else's pocket.
But then, blowing out people's stops so you can buy up the stock cheaper is a time-honored trick.
But then, blowing out people's stops so you can buy up the stock cheaper is a time-honored trick.
If you're investing for long term - you shouldn't be investing in things that require stop losses.
If you're investing on margin - take a good hard look at yourself before you blow up.
If you're trading options - unless you're pushing liquidity - watch yourself before you blow up.
Sell side liquidity is there - until it ain't. Stop losses don't protect you.
People who lose out by being on the selling-too-low side of arbitrage have nothing to complain about. If you had a stop-loss order, you cede your position to the possibility of being sold too low. Moral being that like you said, if you're investing in something that might warrant a stop-loss order, you should be sophisticated enough to use something better instead.
Except that in the long term good companies sometimes go bad quite suddenly. Frequently, the harbinger (e.g. CFO suddenly quits) will erase a lot of wealth quite rapidly. Stops are a good way to not have your portfolio blow up while not also having to obsessively follow the news.
>> Buy and hold index funds.
To each his own, but this strategy has been pretty easy to beat over the last 20 years (even easier over the last 10), for those willing to study companies at all.