Stop-Loss
A mechanical exit rule keyed to a pre-named drawdown level on a position or portfolio, independent of thesis status. Stop-losses are useful for portfolio-level risk-budget discipline and for protecting against thesis-broken scenarios the analyst failed to anticipate, but they are weaker than thesis-broken exits because they conflate price action with thesis status — a position can hit a stop-loss for reasons completely unrelated to the analytical thesis (sector de-rating, macro flow, technical positioning) and exiting on price alone surrenders the option value of the analysis. Most professionals use stop-losses as a backstop rather than as a primary exit mechanism.
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