I’ll try to surprise you with this question. The topic is interesting and heated, often sparking lively debates. I’ll organize a poll on this topic soon.
Arguments of a Long-Term Investor Trading Without Stop-Loss:
Long-Term Advantage: A long-term investor not using borrowed funds can fully ignore market noise and sudden downturns. A stop-loss deprives the investor of this advantage.
Emotional Resilience: The investor has the ability not to succumb to strong emotions. Fear and greed stretched over time, do not impact decision accuracy and balance as much as they do for speculators. Hence, in the case of an unsuccessful investment, the investor can manually cut losses, unlike a speculator.
Improving Entry Price: Through additional purchases, an investor can improve the price to the extent that they almost always have the opportunity to turn a profit if they don’t deploy their entire capital from the beginning.
Basic Argument: The market is volatile, and market fluctuations and corrections are inevitable, but if I’ve invested in a good coin/ token, sooner or later, it should rise.
Fundamental Focus: I, as an investor, focus on fundamentals, and if they indicate that the investment has good potential, I don’t care about temporary price declines.
Rare Argument: A large number of transactions generate a significant amount of fees. Therefore, closing a position with a stop-loss and buying the asset later results in significant commission costs. All these costs accumulate and eat into your profits.
The chart above shows trading results depending on the commission size. It may not be perfect, but it at least gives an idea of the impact of commissions on trading.