DIFFERENT WAYS OF

PUTTING STOPLOSS

By Jaynesh Kasliwal
NOTE

 In all my charts
 Red line is 21 ema

 Green line is 50 ema

 MACD as normal settings

WHAT IS STOP LOSS ?
 Name Itself suggests STOP LOSS
 Stop-losses prevent large and uncontrollable
losses in volatile trades.
 It is to limit the losses so that we are alive to
take the trade on next day
 If you’re not using stop-losses, it’s only a matter
of time when a large losing position will get out of
control and wipe out most of your trading profits,
eventually even your entire account!

 Stop-losses also play a major role in risk

management. Depending on their stop-loss,
traders are calculating what position size to take,
how much money to risk on a single trade,

Source : https://mytradingskills.com/stop-loss-trading
5 METHODS OF PUTTING STOP LOSS
 StoplossBelow Support
 Moving Averages Stoploss
 Horizontal Stop loss
 Trendline StopLoss
 Supertrend StopLoss
1. STOPLOSS BELOW SUPPORT

 Most common method of putting stoploss is below

the horizontal support .
 If the buyer demand is strong the stock generally
takes support on near this area.
 This is purely based on supply and demand of
that stock
 Supports also break during weak markets and
hence we need to apply stops to reduce losses
RULES FOR USING THIS METHOD
 Use strong supports as stoploss where there has
been a long consolidation
 Stock should be in sideways trend of 4 to 8 weeks
for a proper base formation .
 Ideally in such cases your buy point should be
near lower end of box or support to reduce the
stop at min .
 Keep stop loss at 5-8% below support to have
room for volatility .
 In the end it depends upon your buypoint
IMPORTANT ILLUSTRATION
2. SUPPORT BELOW RETEST: HORIZONTAL
 A concept of Reversal of Polarity
 Resistance after being broken becomes support
and Support after being broken becomes
resistance
 A general pullback where the strength of buyers
is checked and if strong stock generally reverses .
 Sometime a stock may fall a little below the leve
and hence room for volatility should be given of
areound 5 to 7%
MOVING AVERAGE STOPLOSS
 The “well known” moving averages, such as
the 50, 100, 200 daily moving averages act as
natural support and resistance.

 21 ema Momentum Trades

 50 ema short term trades

 200 ema positional trades

 200 Weekly ema Long term trades

Can be used as trailing stoploss

MOVING AVERAGES IN THIS CHARTS
 21 : Red
 50 : Green

 200 : Black

 Shouldn’t be used in sidways stocks , either it

should be clear uptrend or clear downtrend
200 WEEKLY EMA
 A fundamentally strong will generally stay over
weekly 200 ema .
 This can a stop loss for your investment which
are above 5+ years
 There can a period where you may get stopped
out and need to reenter but that is small price to
pay for saving big losses
 This can be a life saving tool during consolidation
period where stock doesn’t give return for many
years
SUPERTREND
 Supertrend uses the concept of ATR or Average
True Range. ATR is yet another indicator that
gives you market volatility value
 It is mutilplied by some factors to generate buy
sell signals .
 It works really well in trending market and not
advised In sideways trend
WHEN A CLEAR TREND IS ESTABLISHED
SIDEWAYS TREND
TRENDLINE STOPLOSS
 Trendline as Trailing Stop Loss.
 1. Trending stock Tends to pullback on trendlines

 2. This could be areas of fresh buying or you can

shift your Stop loss to upside
 3. As soon as trendline is broken then you can
sell a stock and take reverse position
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