Many investors struggle with the task of determining where to set their stop loss levels. Investors don’t want to set their stop loss levels too far away and lose too much money if the stock moves in the wrong direction. On the other hand, investors don’t want to set their stop loss levels too close and lose money by being taken out of their trades too early.
So where should you set your stop losses?
Let’s take a look at the following three methods you can use to
determine where to set your stop losses:
The
percentage method
The support method
The moving average method
The Percentage Method
The Percentage Method
The percentage method for setting stop losses is one of the most
popular methods investors use in their portfolios. trough using this
method is determine the percentage of the stock price you are willing to give
up before you exit your trade. For instance, if you decide you are comfortable
with a stock losing 10 percent of its value before you get out.