$ Stop-loss in trading is often promoted as a tool to protect capital, but in reality, it can be an illusion that leads traders to greater losses, especially in volatile markets. When a stop-loss is triggered due to a temporary price movement, the trader is forced to exit the position at a loss, despite the possibility of a price rebound later. This mechanism can lead to a series of small losses that accumulate and erode the portfolio over time.

Instead of relying on stop-loss, a smart trader can use a strategy of averaging down, which is a method of buying additional units of the asset when the price drops by predetermined percentages, known as "dollar-cost averaging" or "adjustment". For example, a certain amount can be allocated in the portfolio to split the entry into the market over several stages, rather than entering with a lump sum at a specific point.

This strategy allows the investor to reduce the average entry price and achieve a quicker profit when the market rebounds, provided that capital is managed wisely and not over-leveraged. Thus, averaging down provides better control over the trade compared to the stop-loss mechanism that may eliminate promising trades before they mature.