Your views on Stoploss

Apurva Sheth
Last time I introduced you to a trader's best friend - Stoploss. Most of you already knew about him before as well but had somehow lost contact with him. So I thought of bringing the two of you together. After all it's always good to say hello to an old friend, isn't it?

Many of you have appreciated using stoplosses while trading. There has also been a very healthy discussion going on in The Club. I would recommend you to read the comments made by club members over there.  Some of them are very helpful to understand Stoploss in a better manner.

Out of all the posts which the club members have made so far I found a post done by
Mr. R Rathore to be one of the best. I am sharing his message here in this article for the benefit of everyone.

"Let me just reveal, I have been a worst hit victim of great financial losses by ignoring SL mechanism completely. I wouldn't like any one to commit such blunder ever. This article should be eye-opening to a many persons like me, otherwise they would be sailing in the sinking board undoubtedly. With immediate effect, I have made SL as one of my best friends avoiding enemy of speculations."

Let's dig deeper into this message. The first and foremost thing that caught my eye was the frankness with which he has accepted losing money in the financial markets. I have rarely seen people accepting mistakes. Most of the times people look for excuses and try to blame others or external events for their losses in financial markets. One can pamper oneself by giving excuses but that will neither help you learn nor improve your finances. 

I really appreciate him for publicly accepting his mistake of not following a stoploss before, which was a big blunder. At a deeper level there is a lot of learning for all of us from him experience. The financial market is not a place where we can afford too many mistakes. You may find yourself in the midst of a financial accident at the blink of an eye. Stoploss is one of the best tools to safeguard oneself from such accidents. And that's what he has asked all of us to do.

This reminds me of one of the most famous quotes by Chanakya "Learn from the mistakes of others... you can't live long enough to make them all yourselves." This is very much applicable in the field of financial markets after all with limited capital in hand, how many mistakes can we make?

On behalf of all my readers I thank Mr. R Rathore for sharing his experience. I would really appreciate if others do the same and share their experiences and more importantly the lessons that they have learned over the years.

You can join the club and share your views, thoughts and experience about stoploss and for that matter any other thing related to financial markets that you think would be helpful to others and make it mutually beneficial for everyone.

What is a lesson that you have learned from others mistakes? Share your views in the Club or share your comments here.

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25 Responses to "Your views on Stoploss"
Utpal goswami
21 Oct, 2017
Dear Apurva, First of all I must agree that you are more of teacher than an analyst. Regarduing stoploss I can say in medical term it is most desirable for a good doctor to decide ampute limbs at the cost of life in right time.But attitude spells the attainment only when contiousness grows beyond mathematics. Thanks;Like 
Shaji
18 Mar, 2015
I use stop loss in trading.However I have never managed to get around the problem of volatility of stocks and currencies when market opens.When you carry over a position if you put a stop loss before market opens it can be triggered in the opening volatility.If you dont put a stop loss the market can gap up or down and your loss can be substantially more than initially calculatedLike (1)
vinay
17 Mar, 2015
how to identify a Stop Loss price? how to put SLLike (1)
mk subramanyam
16 Mar, 2015
It is true I lost lot of many as had not followed Stop Loss, now I am understood the fact that how essential is the Stop Loss. Like 
leo nazareth
16 Mar, 2015
i started onl;ne trading 4 months back the insrtucter at share trading class and the frenchisee of mothlal oswal didnt teach me how to put stoploss i have lost all my profit as well part of capitol. to tune of rs.3.0 lacs as i failed to put sl .now i dont do any trading with out stop loss. it is better to loose small amount by sl then with out slLike (2)
BYK Rao
16 Mar, 2015
Dear Apurva thanks for your excellent articles on various aspects of trading, YOU ARE creating awareness about technical analysis to benefit traders & investors,. As regards the STOPLOSS (SL),it is an insurance against losses while speculating, here again a knowledge of market technicals help in proper use of SL, When market is in oversold condition & about bottoming out, one need not resort to SL.I have rarely used SL in my several years of investing & trading. The fear of traders is, after touching the SL, the price racing up. All in all one should use SL judiciously. byk Like 
digambar
16 Mar, 2015
I agree with Kumar40. There are instances when market dips for a very short time, those who have placed orders incorporating stop loss, loss is automatically booked, those who have not, have still a choice, where to continue! SL on the basis of end of the they is more useful.Like 
Rao
16 Mar, 2015
Agreed. Stop Loss is the only tool by which one can avoid loss 100%. one has follow the procedure and not greedy nor speculative. ThanksLike 
yovan
15 Mar, 2015
In the early days of my trading I was afraid to keep stop loss on the wrong openion that by putting stop loss I will be incurring/inviting loss. AND II GRADUALLY EXPERIENCED that stop loss really gives me a great mental relief at the particular time of trading,reducing loss due to my nervous trading.Hence I feel now that STOPLOSS is my BEST FRIEND AND THERE IS NO DOUBT.Like (2)
TARUN GOYAL
15 Mar, 2015
Markets recently have become very volatile & in such markets , even calculated stop losses are getting triggered , all of them. So , what to do ??Like 
krishnarao
15 Mar, 2015
i feel stop loss is making lossLike 
MANGESH LIKHITKAR
15 Mar, 2015
Yes it is very importnat to keep a stoploss .while trading it is important to limit losses.Treat trading as business and in any business capital protection is a key to stay in the business for long.As long as you stay in business more the chances of making profits.Be quick to accept mistakes and come out of it. Like 
Tilak Keshvani
15 Mar, 2015
Many a times, I found implementing Stop loss ( SL) as blessing in disguise as I received my invested capital in particular share back and made me prudent to know the opportunity cost of money for further wise Utilization ! As a whole, psychologically ,it looks awkward to book the small loss ( that's why people are afraid ) , but fot trader , it is essential element to have cash on hand for further trading ! Hence, respecting SL is always beneficial for Intra day or Positional Trader ! Like 
Prof.V. Mahadeva Iyer
15 Mar, 2015
It is not necessary to use stop loss always. I had been trading in nifty futures for the last five years without a stop loss. Only thing I do is to hedge the futures. Buy equivalent lots of call option when short in nifty and put option when long in nifty. This will enable to know the maximum loss at the very onset of trade if the market moves in the opposite direction. Of course this will reduce moderately the profit if market moves as we expect.If you are a professional trader, the hedge can be selling put or calls.Like (1)
Kuldip Singh
15 Mar, 2015
I would like to admit that despite reading so much about the merits of applying Stop Loss, I was hesitant to apply it till now. This could be the potential reason of my loosing money in Stock Market. But now after reading this article in Profit Hunter's Newsletter, I have decided to make it a point to put STOPLOSS in all future transactions in stock markets.Like (1)
Digambar
15 Mar, 2015
For Long Term Trade ( Target more than 1 year), Stoploess is not reuired. One can also take into consideration % upside. One could select say 3% or more.. as level to book loss.Like 
Sanjeev
15 Mar, 2015
Placing a stop-loss is one of those cardinal truths which need to be hammered periodically lest overlooked. However, what I would like to know is HOW DO YOU PLACE SL ON OVERNIGHT POSITIONS TO PROTECT AGAINST A CRASH? My apologies for the caps but I consider this most important and I don't have solution for this except Long Puts (assuming that there are Long positions only in F&O segment).Like (1)
Yashwant Singh
15 Mar, 2015
Is stop loss necessary for longterm investment also?Like (3)
Balssubramanian.N
15 Mar, 2015
Dear sir. I am very fresh with trade.Recently without using stop loss tool i lost more than 21,000 Rupees in two days. I was thing to stop trading, after reading this i want to start freshly once again. For me the above loss is more than a lack. Thanks Like 
Cpt P Vivekananda (IN)
14 Mar, 2015
Dear Apurva I fully agree that there should be a stop loss, However my own experience on two consequent days I will narrate.On 12 March I bought 10,000 shares of sintex for intraday only at an average price of 123.95 and share moved to 130.5 I put 127.05 as stop loss share at around 2 PM came down to 127 and my stop loss is executed and moved to 132 high closed at 131 and I could not buy again.Next day I again bought 12500 Sintex af 131.75 qty share moved to 136+ and I did not put stop loss thinking that share will recover at least once as pull back to sell however share came down continuously up to 122.25 off course I sold it out at 125.55 average incurring a loss of around 1.05 lakhs .its often said operators know the positions and they trigger stop losses and then move up, I had seen number of times shares which are bullish suddenly come down for few seconds and all stops are triggered and then yhey move up whats the correct stop levels in this cases ?Like 
Gopal Rao
14 Mar, 2015
It's a pity that our on-line trading systems in India do not have the facility of putting a trailing stop loss, with certain set parameters within which the stop loss will move up or down, as the case may be. Is there any chance of EQM lobbying for this facility? Like 
Geoffrey Allen
14 Mar, 2015
Keep those articles coming Apurva!. You are really doing a wonderful job explaining all those little and big things that matter in Trading.. in a language and illustrations that are simple and easy to understand. I have been in the market for many years now and I must admit that...making Stop Loss my friend didn't or doesn't come easy...though it is such a simple and extremely useful tool as rightly stated by you. This is true with the majority of the traders... as the lop sided ratio between the winners and losers from around the world show. And this happens simply because - we, as humans are not conditioned to take or accept a loss. The human brain (unless it is conditioned otherwise) clouds a rational judgement - becomes impaired and people lose both their money and their cause. This is human nature. It cannot be denied - It must be understood. The traders worst enemy are his own emotions driven by greed and fear! From a psychological point of view nobody wants to sell at a loss - and as in most situations of life, making mistakes and admitting them is associated with being a loser. That is why most people prefer sticking to Losing Position. They don't want to be labeled a loser...little knowing that a STOP LOSS does NOT prove you wrong - it just saves you from a big loss. But as I said it does not come easy.... but surely not out of bounds. All that it takes is taking the profession of trading seriously.... giving it the respect it deserves... developing specialised skill sets....practicing DISCIPLINE of the highest order and a Steely Determination of NOT BREAKING the Ground Rules of Successful Trading.Like 
RAJARAM
14 Mar, 2015
Apurva , it is a possibility that STOPLOSS does not work when there is a gapdown . Shall we consider it as rare.Like 
Kumar40
14 Mar, 2015
"Let me just reveal, I have been a worst hit victim of great Notional losses by folowing SL mechanism. Since then i have made stop loss as my enemy :) Stop loss in a rising market is just a blinder,.. only in a sideways and a falling market is it useful... i can quote n number of instances where I have hit by SL and then the Price goes multi fold....Like 
Kodlaya H K
14 Mar, 2015
Stop loss is a must. Trading without stop loss is suicidal.Like (1)
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