Using stop loss to reduce loss

Each and every business has its own pros and cons. Every businessman will undergo ups and downs. Super market owner makes loss with some expired products. Same as the medical shop owner. Grains rot due to moisture and farmers are at loss. Even a contractor of realty sector incur loss when the price of raw materials shoot up due to unexpected lorry strike. Now it's clear that only by taking risks of loss one can enjoy profit.

It is not always true that we loose money in share market. Unless others mentioned above, we can use stop loss strategy to reduce our loss. How? Let me explain... after proper analysis we have decided to buy stocks of Company A at value buying price. After confirming that we are not moved by the factor of F.O.M.O. - fear of missing out. Even after all these, if stock price of company A started to fall we can sell the stocks when it reaches the predetermined price called stop loss. Our loss is limited to the extent we are ready lose.

How to determine stoploss price?


We decide/calculate a price at which we should buy that particular stock. Right? - it's called value buying. The stock also has the support price at which it has a strong support level. If the stock come below that support price it is considered as start of negative movement of the stock. Some people also keep 5% or 10% of the stock buying price as stop loss based on their trading strategies. This is how we decide the loss range and exit the game when we reach that price of stop loss.
Stop loss is very important to limit the loss in stock market

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