Hello, friends! Today we’re going to look at how to correctly set your stop loss level when trading. A stop loss is an order that lets us limit our losses if the price moves against us. 🎯
1️⃣ Define your strategy
First, decide which strategy you’re going to use: conservative, moderate or aggressive. The distance from the current price at which you place your stop loss depends on it.
2️⃣ Set the stop loss level
In a conservative strategy, the stop loss is placed a short distance from the current price: usually 1–2% of the asset’s value. For a moderate strategy, a distance of 3–5% works well. And an aggressive strategy involves more risk and, therefore, a stop loss 6–10% from the current price.
3️⃣ Don’t forget about volatility
Also take market volatility into account: the higher it is, the more likely the price is to change quickly and sharply.
In that case, it’s better to place the stop loss closer to the current price.
4️⃣ Combine stop loss and take profit
If your strategy uses take profits, you can combine stop loss and take profit to protect your gains and reduce your losses.
5️⃣ Don’t be afraid to move your stop loss
If you see the market moving against you, don’t be afraid to adjust your stop loss to reduce your losses.
Remember that a stop loss is not a vaccine against losses, but it helps limit them and manage risk. Good luck in the market! 🍀
