Basics of a stop order... how can I know when should I put one in?

[737ngx]

Hello Guys,

I am trying to make sense of everything I am reading and learning, so much but so interesting,
so there will be a question here, please just stay with me

I am understanding the concept of being careful, specially as a beginner, and use stop orders,
but use them properly, do not let a stock run down with the hope it comes back and make your money back
but also do not put a stop order to close to the buying price because you may stop the order too quickly.
I understand the concept of profit/loss ratio 2:1

but what is the basic beginner strategy to identify where to set your stop order as well as how to
know when to sell and task the profit? I know that there cannot be a one single strategy, I assume this will depend on the
market, the investment and the stock itself, but looking it from a beginner prospective, with an initial $3000
dollar account (which I don’t have one yet) which will trade only on Nasdaq, can you recommend me a
basic strategy which I can then refine as I get experience?

Much appreciated.

Regards
Nic

 

[737ngx]

I am actually planning to trade on Nasdaq, does your answer still apply?

 

[tomorton]

Use the chart to identify a price below which (if you're going long) your reason for entry will be cancelled: if you wouldn't buy in at that price, assume nobody else would, so price would be more likely to fall from there than to rise.

Adjust your exposure per point so that your maximum loss if the stop is hit will not be too heavy on your account.

Check price is in an uptrend, showing a series of higher highs and higher lows.

Check that there is a price which is higher up from entry than the stop is down which the chart suggests should be possible for price to reach, e.g. the re-test of a previous high.

If any of these principles above is broken, stay out.

 

[gerryg]

This one is the easy way to find proper SL and TP for trade. :smart:

There are no easy ways or shortcuts in trading. There is also nothing certain, we can also work out protection in case of drawdown but can't work out strategy that will bring guaranteed profits. You are always in negative odds because of spreads and when adding risk your chances to lose increase dramatically. So before earning thing how to cope with losses.

 

[richy96]

Why does Technical analysis work on indices?

sorry wrong thread

 

[NVP]

No 100% guarantee the stop loss rule you chose will be the best outcome

Depends on what your preference is over time ........Different strategies support different styles....just,like,your entry methodology

Plenty of stuff out there on internet...just type in exit strategy trading