Where to place a stop-lossStop-loss usage is integral part of every profitable stock trading system. It is almost not possible to have good money management system, without risk management using stop levels.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 level 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 level before you set your target! The risk level has to be set under a logical
support
or above a
resistance
level. Here’s an example of setting a risk level for a
pullback
trade:
A risk level 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. My stock market trading tipDefine and use your stop-loss order for every trade you open!! Use spreadsheet or other tool for preparing correct trade setup with all important info based on your risk management rules.Trailing stop loss trade managementWhen you enter trade you must not forget that you must take care of every trade. You must regularly monitor situation , you must know how your trade develops and also you must have rules for trade management. These rules should also include how do you trail stop.All these steps should be accompanied in your
daily routine
Return from Setting of stop-loss back to Stock trading system |
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