Risk Management

The Importance Of Stop-Loss In Trading

Put a “stop-loss” order on your worries. Decide just how much anxiety a thing may be worth- and refuse to give it any more.

– Dale Carnegie

A “stop-loss” order is an insurance against your trade. If you don’t like this word, you can call it “save-loss”. It saves you from having significant losses if the market turns against your speculation.

Irrespective of your expertise, you can’t predict the market to move in a particular direction. Anything can happen, and to avoid unnecessary loss, please put a “stop-loss” order in every trade. It’s the premium you’re paying to protect your business from significant losses.

Trade without a “stop-loss” order is an invitation to a financial hazard. If a “stop-loss” order is hit, accept it with an absolute peace of mind. You’ve saved a significant loss by paying a small premium.

Don’t worry. Take the next trade with a relaxed and calm mind. Even if the second time, a “stop-loss” order got hit, don’t become anxious.

Loss is an integral part of trading. We can’t avoid that. We can only minimize it with proper risk management.



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