The number one secret of placing Stop Losses
Statistics show that traders are right more than 50% of the time, but lose more money on losing trades than they win on winning trades, ending up in the red. Placing Stop Losses is one of the building blocks of successful financial trading. Placing Stop Losses efficiently, however, is an art that comes with practice.
A common tip given to new traders is to place stops according to a set percentage (often 2%) or a set amount depending on how much a trader can afford to lose. Bear in mind though that the market cares more about resistance and support levels than what you are willing to lose.
Bottom line: Next time you calculate your Stop Loss level, how about considering incorporating in your risk management what the market is saying.
Published: 27 May 2014
You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.