What is online trading ?
Every single transaction which we done on exchanges such as NSE ( National Stock Exchange ) , Mcx ( Multi Commodity Exchange of India ) or any other International exchanges such as Dow Jones, Nasdaq will call a trade. You either buy any security/share/or commodity or sell it. Once you buy or sell any commodity/share you are doing an online trade.
Why I should use stop loss in every trade ?
Many of my subscribers argues me i have deep pockets i can hold forever and i dont need to book loss. To bust the myth i have to tell them whole story how did even one of the most best economy Saudi Arabia had to cut expenses when crude oil crashed. I am sure you are not wealthier than Saudi or even a small country. Then they counter me with i dont have such expenses i am just holding one lot and i can hold it forever. For that i have to go deep and give an example of crude oil.
When crude oil fired from 60$ to 140$ how would you have hold sell position in a single lot of crude oil from even 70$. A simple crude oil lot from 70$ to 140$ would have resulted in 70000$ loss not to mention a passionate urge to average the position in every 10 or 15$. By this logic a small trade from 70$ which could have just cost you 1000-1200$ if you post a stoploss could bankrupt you or even gave you a lifetime debt.
Its almost impossible to hold without any stoploss position. Whenever i meet any of my subscriber and they ask me what should we do to succeed in trading, My first reply is to use stop loss and do not play with stop loss. Once stop loss is hit just exit and cut all your losses.
Many times or I should say 60-70% market comes back on your cost after hitting stops but I can assure you that 30% would cost you much more if you manage to save money in 70% situations.
Market comes back
One argument is trader’s favorite that market always come back and we just need deep pockets and patience. Even crude oil crashed from 140$ and came back till 40$, we would have made 20000$ to 30000$ profit in that 70$ sell if we had deep pockets and patience.
Well yes you would have multiplied your money if you could just hold that sell of 70$ but just imagine how much investment it would’ve required you to hold that 70$ crude oil sell. How much mental toll your body would take and how much your finance will suffer and it would occupy you for 10 years. On other hand 1000$-1200$ loss can be recover in our one signal. In 10 years i am sure from good investment and good trading signals you would make minimum 10 times of what you would make while holding that position in crude oil.
Conclusion is Stop loss are there to protect you. Respect the market and accept it you were on the wrong side and move on. There are plenty of opportunities in market to trade. You will surely recover your loss. Move and trade again.
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Let me know your though in comments.