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Today's topic : Three common mistakes make by traders and how to overcome it
1. Use of Stop loss
2. Trailing Stop loss
3. Trading quantity
For regular financial topics do follow the blog
1) Use of stop loss
I have seen many of the traders who don't place stop loss and think that they will exit their trade manually when there level of loss come , which will never be.
Always use stop loss in every trade to avoid losing your whole capital
what happens in practical trading is when we try to exit our loss position we think it will reverse and hold on losing trade which will lead to more losses
2)Trailing stoploss
many of the traders don't trail stoploss when the trade goes in there favor
Suppose we took a trade of 1:4(risk:reward) when we get the reward of (1:2) we should trail our stoploss to cost to avoid suffering a loss if market reverses (but trailing stoploss does not work in case of Volatile markets)
3) Trading quantity
many traders does not decide what quantity to trade they just take random quantity without any calculations
Trading qty is simple math suppose I want to trade 100 rupee share my risk for the day is 1000rupees and my stoploss is 2 rupees difference from my entry point
How to decide trading qty?
Let's do it by simple math : 1000 rupees / 2 points (our stoploss difference from entry point) which is equal to 500 quantity.
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1. Use of Stop loss
2. Trailing Stop loss
3. Trading quantity
For regular financial topics do follow the blog
1) Use of stop loss
I have seen many of the traders who don't place stop loss and think that they will exit their trade manually when there level of loss come , which will never be.
Always use stop loss in every trade to avoid losing your whole capital
what happens in practical trading is when we try to exit our loss position we think it will reverse and hold on losing trade which will lead to more losses
2)Trailing stoploss
many of the traders don't trail stoploss when the trade goes in there favor
Suppose we took a trade of 1:4(risk:reward) when we get the reward of (1:2) we should trail our stoploss to cost to avoid suffering a loss if market reverses (but trailing stoploss does not work in case of Volatile markets)
3) Trading quantity
many traders does not decide what quantity to trade they just take random quantity without any calculations
Trading qty is simple math suppose I want to trade 100 rupee share my risk for the day is 1000rupees and my stoploss is 2 rupees difference from my entry point
How to decide trading qty?
Let's do it by simple math : 1000 rupees / 2 points (our stoploss difference from entry point) which is equal to 500 quantity.
Share n Support the blog
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