The Art of Setting Stop Loss and Targets
A stop loss is a risk management tool used by traders to limit potential losses on a trade. It is an order placed with a broker to automatically sell a security when it reaches a specific price level—known as the stop price. The main purpose is to protect the trader from significant losses if the market moves unfavorably.
Key aspects of a stop loss:
Predetermined Exit Point: It defines how much you're willing to lose on a trade.
Automated Risk Control: Executes automatically, even if you're not actively monitoring the market.
Emotional Discipline: Helps remove emotion from decision-making, especially in volatile conditions.
Customizable: Can be set as a fixed dollar amount, a percentage below entry price, or based on technical indicators (like support levels or moving averages).
PGDM in finance, having 5+ experience in Equity, commodities , forex analysis and trading.
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