Stop losses are a popular strategy used by traders to achieve better performance by closing out of a losing trade. But do they work?
tastytrade ran a study where we compared managing 16 delta strangles in SPY, 45 DTE at expiration and 1x-5x credit received losses.
We found that on average, stop losses hurt performance over the long run, because most of the trades you stopped out of eventually had a better P/L at expiration.
Tune in as Tom and Tony expand on this concept.