We all know Stoploss is our life saver when price goes against us. No second thought in that.
But how to take the stoploss in the live market is the FAQ.
Let's looks at my view and approach in taking my Stoploss.
There are 2 common method of using SL.
Cross basis SL,
Close basis SL.
before I explain more further take a look at this small clip,
First green candle crossed initial SL but didn't close above the initial SL.
At this stage what we are going to do?
Are we booking our SL or wait for candle to close above our initial SL?
Simple, I exit the my positions whenever candle crosses our SL. I will not wait for candle to close.
Reason is Simple, Before I enter into the I calculate the Risk Reward (R:R) based on my initial SL. So to compromise my RR I need to book my losses when candle crosses my SL.
One more reason, If we wait for candle to close, most of the time it damage our trading account ( Hope you saw in the video, It closes way high than initial SL, I cannot take this big SL).
You can argue with me, Sometime price will go in our favorable direction after taking our SL.
Yes, I agree. At that that we can try to re-enter the trade if setup is valid, Else we cannot do anything.
So to conclude, I always prefer to book my SL when candle cross the my initial SL.
The Biggest risk in Stock market is exposing ourself to big risks!