Wed. Jan 19th, 2022

In today’s post, you’ll learn what a stop loss order is and how to apply it.

The best part?

This guide will teach you how to apply it regardless of the market or broker you choose.

So let’s start …

What is a stop loss order and why is it important

A stop loss order is a type of order that automatically pulls you out of a transaction.

It means you don’t have to stare at the charts all day and try to scare the pants off as the price approaches your stop loss order.

Now …

I won’t lie to you …

It hurts to take a loss …

Even if it’s just a losing trade.

But how would you feel when your stop loss order occurred, but the price went against you even more?

Except…

You are not here to succeed:

stop loss order, stop loss

You feel relieved, don’t you?

Not only did you free up space in your portfolio soon to look for better trading opportunities.

But you also avoided a huge potential loss.

Can you see why this is important?

That’s why you can think of a stop loss order as a “risk policeman” that prevents you from losing more money or having unexpected losses.

Now you’re probably wondering:

“What if my agent doesn’t have a stop loss order?”

“I can only go out manually; What should I do? “

Don’t worry, because in the next section I’ll make sure I have all the answers to your questions.

Keep reading …

How to set a stop loss order regardless of the trading platform you choose

This is:

If your trading platform does not have any stop loss orders, it is essential to know the different types of market orders.

There may be a hundred market orders, but they are reduced to four:

  • Buy Stop
  • Purchase limit
  • Sell ​​Stop
  • Sales limit

Let me explain briefly …

Buy Stop – An order to last a long time when the market exceeds a specific price level.

Purchase limit – An order to last a long time when the market falls below a specific price level.

Sell ​​Stop – An order to fall short when the market exceeds a specific price level.

Sales limit – An order to fall short when the market exceeds a specific price level.

Makes sense?

Now, if you want a more intuitive “trick sheet” for understanding everything at once, check this out:

stop loss order, stop loss

(please save it, as it can only save your life in the markets)

Okay, so what exactly does this have to do with the establishment of a loss order?

This is how …

Buy Stop & Sell Stop

And you are trading ruptures …

Then you would want to set one buy stop Place an order at the starting point, and then place another sell stop an order below the price, which acts as your stop loss order.

stop loss order, stop loss

Equally…

Buy Limit & Sell Stop

If you are negotiating setbacks …

Then you would want to set one purchase limit place an order on the withdrawal and then place another sell stop an order below the price, which acts as your stop loss order.

stop loss order, stop loss

Now, what about the short circuit?

Sale Stop & Buy Stop

And you are trading ruptures …

Then you would want to set one sell stop Place an order at the starting point, and then place another buy stop an order above the price, which acts as your stop loss order.

stop loss order, stop loss

And finally…

Sales limit and purchase stop

If you are negotiating setbacks …

Then you would want to set one sales limit place an order on the withdrawal and then place another buy stop an order above the price, which acts as your stop loss order.

stop loss order, stop loss

Makes sense?

Now …

If you’re curious to learn more about outbreaks and setbacks, you may want to read this article here: The Definitive Guide to Backlogs and Commercial Outbreaks

Professional type: If your agent does not have stop loss orders, you can use TradingView (free of charge) to set up price alerts

Now that you know how to set your stop loss order …

The next thing you have in mind may be:

“Where can I set my stop loss order?”

This is what we will discuss in the next section.

So hold on tight and keep reading …

How To Find Out Where To Set Your Stop Loss Order

It is crucial to know exactly where to set the stop loss order.

This is because the last thing you want to do is place it in random places, like you would throw a dart with your eyes covered.

So here are three different ways to set the stop loss order:

  • Below the support
  • Below the low swing
  • Below the trend line

Let me show you…

Below Support

A support area is shown where buyers and sellers have respected the level a couple of times.

Establishing the order of loss below assistance can be effective when trading range markets.

That’s what I mean …

stop loss order, stop loss

Professional type: avoid tested support levels more than five times, as a level becomes weaker the more times it is tested.

Next…

Below the low swing

An oscillating minimum on the chart represents the “closest minimum” to your chart.

Setting your loss order below the swing minimum is favorable, especially for strong trend markets that barely produce support levels

The following is an example configuration that uses this technique:

stop loss order, stop loss

Of course, you’d like to add a “buffer” below the swing, as you wouldn’t want to leave prematurely.

And finally…

Trend line

A trend line is when you connect two or more tilting minimums and act as a support area within a trend market.

stop loss order, stop loss

The best part about using a trend line is that it also acts as a dynamic level to place your stop loss order.

stop loss order, stop loss

The use of this technique is usually effective for trends that tend to respect the low swing.

That said …

Which one should you choose?

Which is the best?

I won’t lie to you …

There is nothing better.

Because the important thing is that you choose something that you can apply consistently.

Makes sense?

Conclusion

Let’s summarize what you learned today:

  • A stop loss order automatically removes you from your trade; it also helps you prevent unexpected or unnecessary losses.
  • Use limit and stop commands according to your business settings and address.
  • Setting the stop loss order is a recipe for disaster; you can place your stop loss order below the lowest low, the support or below the trend line support.

Now this is what I would like to know …

How do you set up your stop loss order?

Leave a comment below and share your thoughts with me.



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