2023-03-16 20:20:34
Stop loss is an essential risk management tool that every trader should use.
It helps you limit your losses and protect your capital in case the market moves against you.
For example, setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. Suppose you just purchased Microsoft (MSFT) at $20 per share.
Right after buying the stock, you enter a stop-loss order for $18. If the stock falls below $18, your shares will then be sold at the prevailing market price.
Without a stop loss, you're at risk of losing more than you can afford, and it can be challenging to recover from significant losses. So, before entering any trade, make sure to set a stop loss at a level that makes sense for your trading strategy and risk tolerance.
Remember, the key to long-term success in trading is not just about making profits but also about minimizing losses.
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