THE END SHOULD ALWAYS COME FIRST
Take a moment to think about stop losses like driving.Do you ever get in your car with no idea where you are going?sure, some may go for a Sunday drive on occasion just for the scenery or to get away and think, but arguably,most never just drive to drive.
Trading is same:If you expect to get anywhere,you must have a destination in mind before you ever begin.Taking a position without a stop often results in getting nowhere at all, especially if trading condition are choppy.
OCCASIONALLY UNFORESEEN DISASTER STRIKES
You will seen a chart of bear Stearns. As you may already be aware, click on below link
https://www.tradingview.com/x/kxNNbubt
The point here is that once in a While, bad things happen to good people, even in the market.
Even stop loss orders won't save your money if unforeseen disaster strikers. However the solution is simple: diversify. If you don't have all your eggs in one basket, they can't all get broken when an elephant escapes from the zoo on a mad rampage and stomps everything in its wake.
We will now move into how stop losses are used as trading tools for profitability,
First hard stops loss
Second trailing stop loss
HARD STOP LOSS
In using hard stops to protect against unforeseen losses, there are two stop loss rules to follow:
1 Always choose your initial stop point before you pull the trigger to buy of sell.
2 Always place stops on the opposite side if support /resistance and/or whole numbers.
TRAILING STOP LOSS
In today's world,chances are that you are pretty busy.If you're anything like us, you have 10 things happening at one time, both inside and outside the market. And for some of us, its just too much to sit and watch our position all day long.
You don't have to do that, though, at least not if you use trailing stops, which can help you capitalize on profit of intraday momentum without having to be there.
if you buy 20 rs share and intraday rumors share jumps 30rs and your trailing stop loss is 5 now you stop loss 25rs and after a day share fall but you are already in profit.
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