Minimize losses and protect the use of stop-loss benefits

Minimize losses and protect the use of stop-loss benefits 

Daytrading the right people can be a very profitable venture. Infact the right people, not only can make a good living, but to thrive and live a very rich life, not many people can even start to dream. However, there is no one to tell you the dark side of the transaction. The dark side is that 90% of traders fail! Well! 90% of people in this world to try their luck or fail completely destroyed their account. 

Too frequent traders inordinately concentrated at the right time to enter the right stock at the right price. Although important, but everything is in the right stock (discipline and planning), and access to it, will ultimately determine the success of the business. 

The next time someone tells you their stock portfolio to 50%, to congratulate them, and then asked: "What did you do to protect your profits?" 

If they puzzled expression on their face looking at you, then you know 50% of paper gain can be easily lost a few days or a few weeks of things. If they tell you they have a stop loss exit strategy in place to protect a large proportion of their income, then you know that they may be ready. 

When the transaction is completed, our profits will be based on the timeliness of our exit. In volatile markets, has won the industry can quickly turn into losses, it is important to reduce losses and protect profits as soon as possible. 

If you do not have a well thought out plan, it does not matter how much time you spend pick the right stocks or the best entry point. Unfortunately, too many short-term traders do not understand how a predetermined exit point is valuable. 

Nobody wants to admit that they have chosen the wrong stocks or a timing error, but the most serious error is not intended. Trying to make a decision to withdraw, while you look at trade is vexing, often lead to less than ideal results. What should have been calm, prevention and well-considered decisions can suddenly become an emotional, before you know it, you are "riding a loss.", You do not ride it more difficult decision "when is enough enough? " 

Consider the following examples: 

"Yesterday I entered the two stocks in the same industry, I'm going to an outlet, but not in other down in the first purchase, I am planning an exit, stop, and only 5% of the increase. Later in the day the stock back to soar, I am 25% of the second-largest trading is not a bad day, the average rose by 15% between the industry one day, but today, ouch! open after the company issued a profit warning and the major market tumbled. none stay still, I rushed to my computer and found that my "winners" As of yesterday, sitting at a loss of 20%, effectively rendering the average loss of 15% over two days. " 

This is what they say: "A bird in the hand is worth two on the jungle?" 

Ultimately determine the success of these industries? In the exit point. Have been used in the two industries stop, it would have been a profitable situation. Although this is only a hypothetical example, it clearly illustrates, no matter where traders enter the stock's bottom line profit will depend on their exit. Third position with a wider stop loss may have run into a 100% increase in profit. It all down to the exit point. 

When you plan for the industry, the correct entry, until that moment, you are in control. However, since then, the market will determine whether the market rises or falls. You can not control, like you can not control with 100% certainty, would lead to what amount of profit (or loss). But you can control, to minimize losses and gains through stop-loss protection. 

What is a stop? 

Most short-term traders at least know to stop, but because this is such an important aspect of risk management, so that our "Trading 101" digress for a moment. 

Stop or "stop" is a type of sell orders literally does what it says, "Stop Loss." Forcing traders will stop at all positions calmly decide, "When is enough enough will" advance. They can be used to reduce losses or protect revenue. Yes, you will lose in some sectors, but the key is to keep losses manageable. Are there specific news, especially a stock market crash or the entire stop will let you out, and according to the prevailing position, to minimize losses, or to protect the gain. 

The most common stop is a "stop-loss orders." For this type of authorized agent of the stop price is reached, in a sell order. When the stock price reaches the price you've set stop loss order becomes a market order. Impact of the stock will be sold immediately, otherwise the "best available market price," the price has nothing to do. Equity sales price is lower than the stop price is a very good chance, but from time to time it has seen the price slightly higher than the stop fill. 

A "stop-limit" is roughly the same stop order, but into an executable market order, rather than turn it into an executable limit orders. Say you want to sell, if the price drops to a certain extent, but you will not take any price below stop limit, stop limit orders. If you have placed a 50 stop limit order price dropped to 49 before they can perform, your stop limit orders will be filled. 

Limit must first stop trigger activated, then it must stay there long enough to be implemented. A stop limit order may not be filled because the exchange of orders into the order. If the rapid decline in prices, and lower than the price before the exchange to get the top of the order of sequence, it may not be filled. As you can imagine, this could be very dangerous, if not canceled, it will only be executed if the stock price moves lower or higher than the price rebound stop price purposes. 

You can often hear "Trailing Stop." Trailing Stops can be a stop order or stop limit, but trading direction, the initial losses to a minimum. As time goes by, trailing stop to protect the increasing proportion of any profits. While Trailing Stop function is becoming increasingly popular, as a general rule of thumb, traders still need to take action to cancel the existing stop, replaced by a new stop command. Trailing Stop in the future could become a standard feature among brokerages, so check with your broker from time to time. At some point, it may set up their own "trailing stop rules," Go away, forget about it. 

All traders and investors, why not use a stop-loss? 

Those of you who have the opportunity to communicate with their peers, you may hear some very successful traders argue that they never use stops, at least not in fact entered a stop order (stop) with their broker mechanical feeling. However, if they are planning their own trading and trading in their plans, there will be a successful transaction price "mind", they will be out of the deal, if it is not going in the direction they intend. This is a "mental stop", if you insist, you can enter a stop with your broker is as effective. 

Note operative phrase, "If you insist," which is synonymous with discipline, some traders have more than others. If you are able to monitor and enforce the "psychological stop" and then, by all means do so. However, if you intend to break off the stock screen, and then "mental stop" or alarm in your trading system and you do not do too much, because you are not there executed. Actual stop loss execution ... a key element. 

If the station is a good way to avoid the loss ride, why not everyone uses them? There Station Why not widely used, but the main reason is manifold: 

* Many traders are just not sure. Online stock trading and all the hype about managing your own trades advent of a new generation has sprouted a "short-term trading" Nowhere. Although the "Ignorance may be happy" In some cases, it is often short-term trading suicide. In these cases, new traders may have knowledge of a trade or planned follow trends, but in many cases, their knowledge may be limited, to know how to issue orders to buy or sell. 

* Not all brokers allow stop (this helps ignorance factor) or certain stock or stock over a certain price, they may only allow stations. This is nonsense, is not in the best interests of traders. If you want to trade through the use of stop-loss protection is strongly recommended, and then shop around and get another broker. 

Stock Exchange from time to time ** will be placed a temporary ban on specific stocks, stop due to market fluctuations. When this is actually what you can do. Please note that this is temporary, you can choose not traded on the stock, or use the "spirit of the stop." If you choose the latter, to make darn sure that you can monitor the performance of stocks and ready to perform "mental stop" case. 

* Finally, there are some examples of possible appreciation of 80-90% in its portfolio of long-term investors may not want to incur taxable sales revenue, even if the stock price decline. This is a personal decision, but if nothing else, stopped understand that this is a wise decision. "...