Tuesday, July 5, 2011

Stop loss order ..a technique ..you must know

Stop Loss orders are orders placed with your broker, and executed to buy when a certain price level is reached if you are holding  a short position. If you sold NTPC @ 188 a share, you would want to place a “stop loss order” at Rs 189.20  to prevent further losses. So, if NTPC's price were to move up to Rs 189.20 , your broker would automatically execute the order to buy,  preventing you from holding on to your short position who's price may be climbing rapidly.
please have a look 
Order was 
Sell NTPC at or below 187.45  sl 189.20 target 186.30 >>185.10>>183.60 >>181.30>>>
but NTPC never crossed 189.00 in entire day...

The placement of a stop loss is somewhat of an art, and MUST be implemented by using technical analysis. Many novice traders, simply say that they will not take more than a 10% loss, and set the stop 10% below/above  their trade entry  price. While this may work to prevent losses, it is NOT the optimal way to use a stop. Novice traders don’t calculate volatility, price levels, and moving averages, and find themselves getting “stopped out” prematurely only to see the stock price rise after they have sold out their position.
Below are some examples of where to place your stop loss:
Stop losses can be placed at a support/resistance level.
support/resistance levels ....yes but not the calculated ...these are the levels coming out from charts...
Stops can be placed just under a moving average. I typically use a 20 period  exponential moving average.  Be sure to give “room for play”. Do not place the stop at the moving average line. It must be place below. Moving averages are dynamic and change as time progresses. Keep in mind also that many traders place their stops in the same place so, market makers may manipulate price action to activate the stops. 
 To learn more on the subject and proper technique to protect your capital and gains,please join our online course for profitable trading and  chart reading now
To place stop loss order see at order type...drop down menu having SL and SL-M , you can select any of these 2 ...if you will select SL-M ,means at triger price you will exit from your position at market rate, if you will select SL then on triggering stop loss price ur buy/sell will be the price of your exit and you will get best price between trigger and your price..here it is possible that your position will be there if liquidity is low..so advising to place /select sl-m type  order..
see here too  http://dhanvarshagrp.blogspot.com/2011/08/stop-loss-order-limits-your-losses.html

read more at  http://dhanvarsha.in/benefits-trading-stoploss-order/

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