%0 Journal Article %A Sarah Marietta Tooth %T On the Efficacy of Stop-Loss Strategies %D 2014 %R 10.3905/jot.2014.9.4.100 %J The Journal of Trading %P 100-107 %V 9 %N 4 %X Standing stop orders, or “stop-losses,” automatically sell out of equity positions to prevent capital losses from exceeding a predetermined threshold. This practice is commonly believed to not only limit downside, but also contribute to long-term portfolio growth. We test this theory by applying stop-losses to the MaxMeasures portfolio selection strategy, and to a bootstrapped backtest of arbitrary strategies on the S&P500 between 1969 and 2012. We find these simplistic stop-losses to be ineffective and generally detrimental to long-term performance.TOPICS: Security analysis and valuation, quantitative methods %U https://jot.pm-research.com/content/iijtrade/9/4/100.full.pdf