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Stop Loss

The concept of stop loss comes from the world of stock trading. When you buy a certain stock at a certain price, you define a stop loss price that is a few percentage points below the price at which you buy. If the stock falls below this price, you immediately sell it, thus limiting your losses to the predefined risk amount. 

In a broader sense, the concept of stop loss is knowing when to quit. 

When we take on a new challenge, pursue a certain goal, we might want to define the circumstances under which we will quit and give up on pursuing that goal. 

Knowing when to quit is a great skill to have. But a lot of people prefer to be stubborn instead. They feel they shouldn't ever quit. That they should keep persevering until they achieve the goal. Books are written and movies are made about people who never give up and eventually achieve that they set out to. 

However, that is just survivor bias at play. Books are written and movies are made about such stories simply because they are uncommon. If all it took was to persevere, then everyone would eventually achieve what they want to. What we don't hear is the stories of all those people who kept at it but nonetheless failed to succeed. 

Having a stop loss is a more pragmatic way of approaching goals. 

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