Stop Loss

Scholarship for beginners – The Stop Loss

Setting a stop loss is probably the most important step in a negotiation strategy, and it is interesting as one of the most neglected. Support levels are points where a component stocks last fall at a price more buyers than sellers to pass the plate, draining sales and inventory turns up.
Support levels are the most important stock is headed much lower, then turns sharply and returns to the floor.
As levels of resistance, we have low levels of support, as happens every day as traders price foreclosure at significant levels that are added every day, to a significant degree of support these last months, years or even decades, according to the company’s growth and long life.
A cache of arrest under a very important support is less likely to occur than in a shelter and support is not so important. Indeed, a high degree of care requires a lot of selling pressure in the breach, where, to support small yield easily.
If we watched the stock closely before you buy, the most recent significant level is not too far behind us, and not too far below.
This means that working capital for each trade of $ 10,000, the maximum loss you could ever take in a certain trade was $ 700 to $ 1000.
In most cases, bad trades are limited to about U.S. $ 300 which is a real risk that the average earnings of U.S. $ 2000 for a complete business cycle.