Stop Loss Do Help
Stop loss may not strange for professional investor but if you don’t know, you better check it out. This strategy might reduce loses and it’s some kind of free insurance policy. Check with your remiser whether you can put a stop loss.
While we always make a decision based on emotion, the stop loss can help us to prevent our emotion to control our decision. Putting stop loss when trading called Stop Loss Order. It’s depend on the stock itself but normally stop loss level under 10% of the stock price. Stop loss level shouldn’t decline but should be increase if the share price increase. For example: you bought one lot ABC share at RM1.00, the stop loss should be 90 cents if we based on 10% stop loss level. But if the share price increase to RM1.20, the stop loss level now increase to RM1.08. Meaning that if the share price of ABC drop until RM1.08 or below, you must sell it immediately to avoid more loses. Stop loss doesn’t mean you’re losing money.
This stop loss strategy is design to help you not to fall in love with your stock.
