I generally use initial. and later, trailing stops on individual equity issues.  As an alternative, I buy LEAPS puts against long stock positions.  On rare occasions, I'll short an index if I think there's some compelling reason to hold a stock that's sinking (and usually feel dopey afterword -- should have pitched the issue rather than hedge).  I think I understand all the "stay the course" stuff, which certainly worked for lots of folks over the multidecade bull market in US equities.  But I really feel as though the buy and hold stuff has become more a matter of faith than logic and SOMETIMES its consequences can really damage its adherents.  Of greatest recent concern is the joint application of the buy and hold AND dividend growth theses to the cratering bank/financial sector.  Stops, whether the desciplined mental type or actually placed in the market, are intended to help preserve capital when the story changes.  I think its a very natural human response to feign satisfaction with occasionally distressing investment program results when they occur.  But (for example) when the multi-decade growth-through-financial-innovation/leverage story changed for the banks last year, it was really important to get out.  And with a tip of the hat to the long term holders, selling C or WB when they diverged 10% or even 15% from their (pick you favorite) intermediate term moving average using trailing stops might still have netted you doubles, triples or even quadruples.....and most of your capital to redeploy in more productive alternative total return income strategies from (pick your favorite) a money market fund to a dividend stock in a less-affected industry.

Regards, Dick