[Dogpile]

One thing big program trading firms can't do is carry positions with resting stops that get executed without slippage. I am talking about the big institutions here, not the nimble < $1B hedge fund.

To the extent that all trading involves probabilities, not certainty -- the use of stop-loss orders limits losses for all the times where you suffer 'variance' to the expected result. Especially in a world where the 'non-linear break' is always a risk due to growth of derivatives.

There is really only one good reason why a LTCM can blow up -- they could not get out of their positions. Being nimble is a real advantage.