Beginner's Guide For Traders About Stop Loss Placements ?
Do you place your stop losses in valid places or do you just place them anywhere?
Here are 3 valid reasonings to position your stop loss in the right place.
1. If trading inside 2 zones, it makes sense to place your stop loss outside of the zone. For eg: if we place a buy at the support (bottom) zone, we would place our stop loss underneath the zone.
2. If trading the breakout strategy, it would make sense to place your stop loss underneath or above the zone that the price has just broken above/below. For eg: If the price breaks above resistance (upper) zone and retests it, we would place our stop loss underneath the newly made support zone.
3. If trading using trend lines, and you’re trading with the trend, it makes sense to place your stop loss underneath the trend line. This ones simple - if the price breaks below the trend line, the price has changed trend.
Remember to always place your stop loss in valid places and make sure your stop loss is significantly smaller than your take profit.
RISK: REWARD IS EXTREMELY IMPORTANT!!!
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