That is why we do not see many Professional Traders in Sri Lanka.
STOP LOSS is not rocket science, it is a simple calculation.
It is this - If you want to be a trader YOU MUST BE WILLING TO PLAN TO EXPECT A LOSS. If you are prepared to take a loss, you must decide on the amount you are willing to LOOSE. Are you willing to loose 100, 1000, 10000, 100000 on a trade? Say you are willing to Loose 1000 rupees then you must know your Buy price and the Stop loss Price, and the difference between the 2. Meaning if the Buy Price is 10 and the Stop loss price is 8, then the loss you are willing to take is 2. Once you know the amount you are willing to loose and the rupee difference, THEN you know how many shares you want to buy. In this example it is 1000/2 = 500 shares. That's it, you need to know that your lot size per trade is 500 shares to loose 1000 if you stop your loss at a price difference of 2. Is this rocket science? NO, but it is easier said than done. To be a Professional Trader you must develop this discipline else DO NOT TRADE.
Next thing is to know the chances of you loosing this amount. If the buy and the stop prices are near to each other then you will see it coming down fast. But if the price difference has a wider gap then you may not want to stop before you sell at a profit. eg: If your buy is 10 and the stop is 8 while your sell is 14 then the gap between the buy and the stop is Narrow. But if your buy is 10 and the stop is 5 whilst your sell is 15 then the gap is wide. Furthermore the lot size also will adjust based on this difference. Meaning if the gap is 2 and you are willing to loose 1000, then your lot size will be 500, but when the gap is 5 and you are willing to loose 1000 then you will buy 200.
Trading to a disciplined plan makes you a PROFESSIONAL TRADER out of the PACK of ignorant and naive Traders.
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