What a stoploss really does — our data
We dug into our own numbers: 4,543 real stoploss breaches across roughly 350 stocks, crypto and commodities.
At first glance, the stoploss looks like it cries wolf. 97% of positions are back "above the line" quickly, usually within a day. It sounds like you keep selling for nothing.
But that figure is misleading. It's mostly the same nervous names crossing just below and just above their level over and over — about 13 times each on average. And "recovery" only means back above the stop, in a market that was rising anyway. That tells you little.
The real question is: where do those positions stand now, compared to their own peak? That's where it gets interesting. Two-thirds are still more than 10% below their highest point. A third are more than 20% below — dead money. The typical breached position sits about 15% under its top.
So a breach isn't a false alarm. It marks capital that has stalled. A stoploss protects you not only from losses, but above all from money sitting idle.
And the crash protection? Most of the time you don't notice it. But every so often one truly collapses — our worst case: a 96% drop. That's exactly what it's there for: cheap insurance against the rare disaster.
One more detail: breaches cluster in fear. Half happen at a VIX around 20, and 28% in outright panic (VIX above 24).
In short: a trailing stop is less about "dodging the crash" and more about not letting your money gather dust in stalled positions.