Stop Loss Strategy – learn manage risk to protect your capital.
Stop-loss strategy is very important in trading. Before you start any trade to buy or to sell such as stocks, futures, options, commodities and forex, decide where your stop loss is. Don’t focus on how much you will win, but how much you can afford to loss. If you cannot handle the amount, give it a miss. There are plenty of trades and opportunities. But your capital is limited, even you have a huge capital but still limited. The market is limitless unless its collapse.
Where to put your stop loss
There are many ways to decide a stop loss. These are just some suggestion. In a very volatile market, you can use the last low or high plus a few ticks in the same time frame. In a calmer situation you can use the last low or high price plus one tick of course in the same time frame too.
We never know which trades will win and lose. The use of stop loss orders is very essential in good trading and money management. Controlling the risk even you lose it will allow you to move on and take another trade.
Trading is very personal just like golf game, you are trading against yourself. Don’t worry about other, and do what is working for you. There are people proud of having very small stop loss as long as he win.
Too many guru in the market teach you how to enter trade, but not many will teach you how to exit to protect your capital or take profit.
Talk soon.