Setting stop loss is one of the most important aspects of trading. Stop loss will help you save money if the trend goes against the trend.
There are many theories about “Stop Loss Hunting” but those theories should not stop you from setting Stop Loss.
Using proper methods to Sector stop loss will only always help – ATR Indicator for setting stop loss
Importance of Stop Loss
Never underestimate the market! Anything can happen in a second.
Imagine you’re enjoying the profits and all of a sudden the price falls (Image)
Scenario 1: U haven’t kept a stop-loss
You are riding a nice up-trend but all of a sudden the price falls may be due to some Global News or Bad Quarterly Result!
What happens now?
All the profits gained will be lost and you will end up in a huge loss!
Scenario 2: You have a Stop Loss in place
Now what happens?
When stock suddenly goes against you, Stop-loss will save you from huge loss and if you had trailed the stop-loss you would end up in profit.
Profit booking is important but saving your account from these kinds of fall is even more important.
Don’t ever trade without having a “STOP LOSS”