I don't use them Vandelay. The reason is that when the market gets volatile, you can get shaken out of good companies just because of temporary share price drops. I prefer to look at all share price movements with some type of context. For example, in March, I had a number of companies that dropped over 10% in a day, and a couple that dropped over 20% in a day, and from March 24th, some of those same companies started rising, and sometimes by similar amounts (in percentage terms). The context was that almost everything was falling in late Feb and through most of March (up to the 23rd), so this wasn't due in many cases to company specific issues. Obviously - with airlines and travel agents and so forth, the fundamentals for the businesses had changed, and was changing, so that needed to be taken into account, but that didn't apply to ALL businesses whose share prices were getting smashed. The trouble with trailing stop-losses is that it is purely based on numbers, and no allowance is made with regard to WHY share prices are moving. Stop losses are probably a good idea for traders, who want to limit their losses when things move against them (hence the name - stop loss), but if I've done the research and bought a company based on fundamental analysis, and the investment thesis remains intact, I don't personally want to be shaken out of a stock just because the share price has moved against me on a particular day. One example where it might work well is if you have made a good profit on a company, say 40% profit, and you're worried that the company is now either fully valued or overvalued, yet you don't want to sell in case you miss out on another 40% or more. In this example, you could set a trailing stop at say 10% below the last closing price, and then if the stock drops by 10% or more, you've hopefully locked in around a 30% profit. However, I wouldn't even consider that if I was on a 40% paper profit and I thought the company was still undervalued. I'd only do it if I thought the company was either fully valued or overvalued. Having said that, I've never used stop losses. I prefer to look at each share price movement of each position I hold on its merits and make my own decisions. It may depend on how closely you want to follow the companies you hold -and their share prices - and whether you have the time and resources to do that properly - and also what you need to do to help ensure your own peace of mind. But beware of the pitfalls. An obvious pitfall is you buy XYZ for $1, you set a stop-loss at 10% below the last closing price, it drops 12% the next day because the market has a bad day and everything is down, and your position is sold, at a loss of at least 10%. Over the next week the stock recovers and ends up 10% above your original purchase price. I see very little upside in this scenario. You can move that stop loss up or down - to 5% or 20% - and it's still a poor outcome any way I look at it. There are obviously times when you'd be happy with a 10% loss, particularly if the SP keeps falling and bottoms out at 60% below your purchase price, as happened to a few companies in late Feb and the first 23 days of March, but there's nothing to stop you selling that stock at any time yourself, rather than let it get sold automatically based purely on a percentage fall regardless of context. While some of the companies whose SPs halved in Feb/March are still climbing back, some have already regained all of those losses and have actually moved higher than they were in January or February. Some quick examples include FMG, MIN, APX, XRO and APT, plus many gold miners. Those people that miss the biggest falls often also miss the best rises, because stocks CAN bounce back fast and hard, when they do. My own preference is to stay mostly invested most of the time, and to exit companies when (a) they look fully valued or expensive, (b) the investment thesis is busted, or (c) there are better opportunities elsewhere. But - horses for courses. Stop losses will suit some people. They don't suit me. Hope that perspective adds something.