When Is The Best Time To Give Your Stop Loss Orders?
The next area that we need to discuss is how to calculate our stop loss and when to give our stop loss orders. The stop loss is simply the predefined point at which we exit a stock. This exit point is determined before we even enter the trade. Giving stop loss orders is when you tell your broker to actually sell the diminishing stock. You see anytime that we enter a position, we don’t know at one point we’re actually entering into the trend. We might be entering into a stock just before the trend changes.
Before we can give the stop loss orders, we need to set a stop loss. Effectively, it’s like drawing a line in the sand underneath the share price, and we say, “If the share price falls below this line, then the stock hasn’t done what we thought it was going to do, therefore we’ll exit the position by giving our stop loss orders.� This allows us to cut our losses short and we all know how important that is, and here’s why – psychologically humans are hard wired into believing that they must be right. When 95 percent of traders enter into a position, they’re expecting to profit from this trade.
To read more, go to the Stop Loss Orders website by clicking on this link.
Last modified June 27, 2007Author 309 > has blogged 215 times
