I think a lot depends on your strategy or trading plan or reason for trading, the timeframes you are trading over, as well as the instruments you trade in (options, shares, cfds etc) as to the importance of stop losses
Ultimately though, as an active trader, capital preservation is what it is all about, growing that capital is also important, but no capital... no trading.
If you are using a leveraged instrument, such as a cfd,if your position goes against you, this can mean more than just a capital reduction, or capital "tied up" it can mean that you actually lose more (and in some cases a LOT more) than your initial stake.
In such a case getting out of a "bad" position before you lose more than your capital is a good idea.
With pure equities (shares) this is not such a big problem and therefore less risky, but CNP or BNB as current cases in point, initial capital stake could now be a quarter or less than the initial position worth. That means the equiity would have to quadruple to get back to break even... Look at the number of posts searching for the elusive "multibagger" to understand this is not necessarily a certainty.
From a trading perspective, I am looking for trades that are winners. If my trade is not a winner, it is tieing up my capital, and I beleive it is best to cut my losses and move on to the next trade, rather than hoping for a turnaround.
There is also the very significant point that I am entering a trade based on certain parameters (I'm a tech analyst at heart)and expectations that price will perform in a certain way based on these parameters.
If price does not behave the way I am expecting, then my original reasons for being in that trade have been voided. I can "hope" that the trade will turn around and come good, but by doing so, I am violating my reasons for entering that trade. I am no longer trading to plan or parameter and in my opinion cannot justify holding the trade and thus I must exit, take the loss and move on.
The question of how much loss I am willing to take before exit is paramount, and ultimately determines the level of stop loss. Sometimes this can be a small amount if I am right on the edge of a break in price, sometimes I can leave a bit more room for price to breathe, all depending on the parameters of the trade.
BUT, I must preserve the capital, or I will not be able to keep trading, and if in equities, I then become an "invester" not a trader (!)
Regarding Super Funds as buy and hold, so why not just buy and hold, sure... that works where the time span might be measured in years or decades...and doesn't realy relate to my perspective of operation of an active trader... that's an investment in my opinion.
As an active trader I'm working on shorter time frames. If I had put all my capital into financials in October 07 and not traded since, I would be sidelined and without capital for trading now.
Hope that helps a little with why stop-losses for an active trader can be a good thing... but I would suggest that the important point here is the meaning of the words "Active Trader"
Ultimately if we buy and sell, we are all traders... even Buffet sells...Investments for such things as super, or for dividend style income are a different picture from active trading, methinks.
