5 Answers
<p id="isPasted">Stop loss is exactly what it says. Stop a loss.</p><p>You must set triggers to sell at profiting positions of your choice. It’s similar (and accomplishes what you’re intending to accomplish) but has different terminology.</p>
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<p>Your Risk/Reward ratio should be ideally 1:2 or higher. As an example, in Forex your Stop Loss is 40 pips and your Take Profit is 80 pips. Over time with a strategy with positive expectancy every winner offsets 2 losing trades. Then your win/loss ratio doesn’t have to be near 100% so you don’t need to be the most winning trader in the history of the financial markets.</p>
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<p><br>I try to think about, what price would this stock have to go to down that would make me question my initial thesis for buying this stock? What price would it have to go down to that indicates I was wrong about the stock? I set my stop-loss there.</p>
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<p>Your stop loss level is very important. It should be large enough to weather typical volatility without a constant stop out. If you are being stopped out every day you need to rethink your strategy.</p>
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<p><br>Finally don’t put your stop above and below major levels which are stop run targets. Try to position yourself where your stop loss is not in the strawberry patch with all of the other Retail stops. When harvest time comes you still want to be on the vine. Think outside of the box.</p>
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