Understanding Stoploss – Don’t turn to Trading System without it.

Understanding Stoploss – Don’t turn to Trading System without it.



Have you ever wondered why people succeed in trading without stop-loss more than other who are using stop-loss orders and staying in front of the system all the time?

There is an obvious answer.

  • They know something that you don’t know.

It’s not enough to use stop-loss orders you need to know hacks that made the difference.

alpha trading Want A Thriving Trading Returns Focus On Stoploss


The word that has the worst reputation among the Traders is Stop-loss. Three main reasons why you should not enter the trading room without the trading stop-loss in mind.

#1 Clarity on Risk to Reward Ratio

Considering the natural market fluctuations is very important. Many times the stop-loss are so closely placed that the market fluctuations change the course of action.

Keeping in Mind the Standard Deviation. One should calculate the right risk to reward ratio.

It is not necessary to enter a stop-loss order.

You just plan your trade much before entering the trading room. And you execute you trading as per the plan without any deviation from the plan.

Most people don’t know when to sell.

Stop-loss based on the Risk to Reward will give them the clarity of exit strategy.

#2 Be Prepared for the Worst

Panic!! This is the main reason from most of the worst decision in the Trading world.

The main reason behind the need to panic is when you are not aware what the situation could turn you to.

Having a system in place keep you prepared for the worst and you are not taking the decision out of panic.

Your statistical losses are part and parcel of trading and you are not going to make it look complicated. Losses to you are more like calculated risk and you can accept the losses comfortably and learn from your trades.

#3 Protect Your Capital

Your trading is possible only because of your Capital.

No Capital No Trading Possible.

Your stop-loss is only as good as your Risk Management is. When you are into the trading room you are only focusing on the return that you are getting either positive or negative. In both the cases, you are emotionally shaken. This makes you take decisions that might sound only good at that point in time and do not perform as expected.

Another advantage is you can protect your profits too.

That sound so good.

The reason being one your strategy starts moving in your direction you can trail your stop-loss. This not only protects your profit but also ensures that you get better returns for the risk undertaken.

  • Want A Thriving Trading Returns? Focus On Stoploss!

    Prioritizing Your Stoploss To Get The Most Out Of Your Trading

Ensure that you are ready with your stop-loss and plan of action even before entering your trading room.

Stop-loss order does not cost you anything they are absolutely free. Make sure that you have done your homework to calculate the standard deviation before placing the stop loss so that unexpected market correction does not trigger your trading plan.

But in the meantime, here’s a tip you can use right away. You’ll never change your own stop-loss in the opposite direction of the Target.

Come back here and tell us about the before-and-after. I bet you’ll have something to say!

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About the Author

Chintan Chheda is the owner, brand strategist, and Head Trader at AlphaTrading. Chintan Chheda is an entrepreneur, marketer, and writer. He authors in-depth guides, hacks, tutorials that teach about Investing, Trading, Personal Finance & Passive Income. He also authors on long/short equity, Deep Value, special situations, Growth.

Chintan Chheda: View My Blog Posts

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