People don't use stops for three reasons: ignorance, wanting to hang on to hope, and the trouble with whipsaws.
A whipsaw means that you buy a stock, set a stop underneath, the stock declines and hits it, you exit with a loss, only to see your stock reverse and rally just as you originally expected. After several whipsaws many folks give up using stops. But trading without stops is a receipe for a disater because sooner or later, one of your 'stopless' stocks will get caught in a major downdraft and deliver a 'shark bite' to your account.
-------Dr. Alexander Elder
