Where to place a stop-lossDefine and use your stop-loss order for every trade you open!! Immediately after your scanner finds a good opportunity for a trade setup and after you’ve defined your entry point , you must set your stop-loss point. This value has to fit with your maximum risk for trade that you’ve defined in your stock trading strategy . You have to set your stop-loss level before you set your target! The stop-loss level has to be set under a logical support or above a resistance level. If you have a swing trading system, then your stop-loss level should be closer to your entry point than for a position trading system. A stock setup for a day trading system must have a very narrow range between the entry point and the stop-loss level. Here’s an example of setting a stop-loss level for a
pullback
trade:
A stop-loss for a breakout trade doesn’t have to be very far from a broken support or resistance level. This will protect you in case of a failed break. You can use the same values you use to define the entry point . You can also use charts of a lower, intra-day time frame like a 60-minute chart or a 4-hour chart that can be used to find a good intra-day support or resistance level for placing stops.
Return from Setting of stop loss back to Stock trading system
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