Importance of stop loss in trading

             

            Stop Loss is the price at which you sell your shares. By selling shares at the stop loss price, you avoid big losses. Actually, you decide the limit of possible loss in a share at its current price. Only after this you apply a stop loss in a share, which reduces your loss. However, stop loss is used so that you can avoid loss during the ups and downs of the stock market. The stock market is largely driven by emotions. In such a situation, you can suffer as much loss as you make profit by investing in shares. Let us tell you that stop loss is a means to reduce this loss. Another advantage of applying stop loss is that if you do not trade regularly and cannot monitor your investment regularly, then it can prove beneficial for you. At the same time, stop loss can actually save you from many losses in this condition.

          Nobody enters the market to lose money, and everyone hopes to make a profit. Despite this, statistics show that only a small percentage of traders can trade the market without zeroing out their account.

Why is that?

           Because the human psyche is unreliable, especially when it comes to letting go of situations that have been emotionally negative for us. Everyone holds positions in the hope of making more profits, thereby taking on too much risk. And the end result is losses.

Profits of Stop Loss Order

  Stop-loss orders are better for investors or traders who want to avoid monitoring stocks daily and limit their losses. The limits are set in advance and the trade is triggered automatically. Moreover, stop-loss orders prevent emotions from getting in the way of buying or selling stocks. This prevents losses from mounting and helps you make the most optimal trading decisions without any emotions.