Vulcans suppress all emotions. Not too appealing, unless you're a stock trader. Vulcans follow pure logic. Even when, you can't help but think, the logical course of action would be to completely sell out of the market and move to Montana, or mortgage your house to double down on your position. Then again, all Spock's logic seems to be good for is stating the obvious but often it's the obvious that traders overlook. A stop loss that is often not presented as such, is a profit thesis. A profit thesis is your idea of how you're going to make a profit in a trade. The simpler, the more refined, the more exact your profit thesis is, the better. The reason that you establish a profit thesis like this is that if the profit thesis is violated, you get out of the stock. A trader messaged me today and said, "Wow Lance! What is the stop loss you are using on TVIX? It's awesome! I was looking at the chart and I don't see how you knew to get out so quickly." What this trader is talking about is the small loss I took today in TVIX. I exited the stock at $56.71 and took only a -1.12% loss on the trade. TVIX fell another 11% after I got out. My response to this trader is that my stop loss on TVIX is my profit thesis and whether or not it's been violated. How did I know how to sell out of TVIX at $56.21 this morning? My original profit thesis was that I was going for a quick scalp play on the market over the bad news coming out of Europe with the Greek referendum as well as the Euro crisis. Two news stories broke this morning. The first was that the EU lowered interest rates. Now, lowering interest rates is good for the stock market. The other news story was that the Greek PM canceled the referendum and will try and meet EU leaders demands to receive the next bail out payment. The tie between the direction and levels of rates of interest and the overall performance of the stock market, once more, are very well known hence the old saying: You shouldn't fight the Fed. Despite the fact that correlations are, again, not quite perfect, typically, stocks do best when interest rates are steady to decreasing, and worst when interest rates are unstable and climbing. That's why the stock market rallied on the news that the EU lowered interest rates. Lowering interest rates causing the stock market to rally is not surprising if you take into account the positive effects of reasonably low interest rates on the economy as well as on the stock market. Low interest rates, for example, lead to reduced home loan repayments, which support the pricing of homes and real estate, which leads to increased building, which benefits the many industrial sectors connected to home and office building and contributes to homeowners' sense of well-being, that leads them to spend more money on products or services, and the like. Low interest rates likewise support business investment, the purchase of inventory, installment sales to the public, and so forth--all of which are advantageous for business conditions. Low interest rates reduce the competitiveness of long-term bonds, shorter term money market funds, and bank CDs as compared to the stock market. This encourages the concentration of investments into stocks and, thereby, directly and indirectly into new and well-known organizations. Low interest rates are bad for gold. Rising interest rates are good for gold. This is why gold bugs like Peter Schiff hate low interest rates. According to Peter Schiff, the Fed should have been raising interest rates since 2006. This is absurd and would have put the country into a Great Depression: something Peter Schiff would love as his gold investments would soar. Indeed, the record shows that Peter Schiff predicted gold to hit $5,000 by the end of 2010. One of the things that stopped that from happening is the Fed's low interest rates. Not to mention that Peter Schiff hates the Fed and all government because it put his dad Irwin Schiff in jail in 2005 for tax evasion. He's currently serving a 13 year prison sentence at Terre Haute Federal Correctional Institution. Remember, rich guys like Peter Schiff go on news programs to promote their own investments, not to help you make money. Their looking out for #1. Always follow the money to get at the true reason for why their economic views are the way they are. So when these news stories broke today, that meant that my profit thesis was violated and so I got out of the trade as fast as I could. That is how a profit thesis really functions as a stop loss.