#StopLossStrategies

Methods of Setting Stop-Loss

To trade on any financial markets (not only on , but also on commodity futures, stock markets, or even exchanges) a system is necessary. Typically, each quality trading strategy includes rules for setting a stop-loss; however, there are also universal techniques that are suitable for almost any trading system.

The simplest option for setting a stop-loss is at the local minimum (when buying) or maximum (when selling).

Local extremes allow traders to identify points where a mini-trend has reversed or a correction has halted. Many traders rely on these: if the price breaks the previous local extreme, it is likely that the trend will continue. Therefore, when breaking a minimum or maximum, many new market participants typically open positions in the direction of the trend, which further pushes the price.

It is recommended to set the stop-loss a few points below the minimum and above the maximum, so that it is not triggered by a false impulse.