STOP LOSS : NEEDED OR NOT??

Prime function of SL IS “PROTECTING THE CAPITAL”.  If one is capable of making good money management, then market can never be able to put you in loss. Definetly, there will be days, when you close your trade in loss, but at the end of a week/month/year you will remain in profit. SL helps you in booking small loss instead of book a huge loss. Yes, you here it right, booking a loss. You have to respect the market and its all decisions, you can never go against it, so respect it decision, if it is giving you loss, that should be fully respected by us and book it. Don’t try to resit it and make it a matter of ego, that you can never in loss or your trade setup cannot be fail, even you select it as per market trend and take the trade accordingly.

Here, we discuss some methods to put SL in Intraday trade:

A ) Multiple stop loss rule for Intraday:

If 3-4 stop loss hit occur in single day trade, don’t go for another trade.

Reason : Considering SL to Target ration as 1:3, hence forth if 3 trade hit SL then loss will be x+X+X=3X

And if 4^rd trade hit the target, as per ratio of 1:3, therefore profit will be 3X.

Henceforth loss of first three trade i.e. 3X will be managed by fourth trade viz. 2X.

B) Multiple SL type II: Generally we find the resistance of support zone, instead of a point, hence if you able to find a zone for your SL, then you should put SL lot wise. For e.g., if you buy 100 scrip, you can put the SL by 50 scrip first, then 30 scrip and at last 20 scrip. Sometimes it helps to hit your SL to be hit by the tail of the candle.

For more information, do comment or visit our website.

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look at the chart for a quick understanding