Calculating Stoploss

[vinumenon]

Hello Seniors,
Please help me calculate stop loss levels....

Yesterday I bought 1 lot of DLF @287.5, put a stop loss trigger of 283 with a stop of 282. Stop loss hit at 282.95. DLF was trading above 282 the entire week so was not expecting it to hit 282 level. This trade cost me 3% of my capital(Rs.4700).

So how to calculate stoploss? Should I go with the common rule of 2% risk of capital which will be in my case 284.5.
For a stock like DLF 3 points stoploss is very easy to hit. So with 160K capital I should not trade stocks like DLF ? Or should I go for a deep stoploss say 278 which is very difficult to reach.

Please help me.

 

[praveen98]

hi vinu,
i take my trading decision based on pnf charts ...which clearly indicates my stoploss point for the trade. i dont know which system you are following to make buy/sell decisions..but keeping percentage stops in conjunction with chart will be more helpful in my opinion. say if we are taking 2% as a stoploss per trade then our amount of loss is 3200...if the lot size allows me to take a trade in conjunction with chart...( i mean if lot size is 800 and my stoploss point on chart is at the max 4 only i will go long in futures..if itis say 8 rs then i will go long in cash ...only 400 shares) This is the method i follow . HOPE THIS HELPS.

 

[nifty]

Hello,

Keep stoploss whatever not important it is 2% or 5% but important is loss after hitting stoploss should not be more than 2% of your trading capital. If you have 1 lk and your TA says stoploss of 5% then purchase shares of 40k means after hitting stoploss of 5% you will have maximum loss of 2k that is 2% of your trading capital. Yes migth be you will not able to trade in dlf but you can try mini nifty or any stock which requires less capital.

Happy Trading...

Trading Nifty Future

 

[areebs]

According to me there is no definate rule or a fixed percentage of stoploss that you need to keep.It all depends on which stock your trading in.Like you said you trade in DLF then you need to study the volatility of DLF for intraday movements and before you enter a trade you need to have in mind the maximum loss you can take in that particular trade.
There are 2 parts :
1.If you keep a small stoploss then chances are it will hit often but the loss would be small.
2.If you keep a big stoploss, then it will hit not many times but whenever it hits your loss will be big.

So all this depends on your risk,on the volatility of the stock your trading in and also the profit potential you aim to gain in that trade.

So in Short, before entering a trade , have a system or a plan in mind , when to enter/exit that trade.

Hope it helps !

 

[d_s_ramesh]

Praveen was perfectly right, your capital should allow you to trade the stock with the preferred system stop loss. You should not buy at some level and fix the stop loss at 2% of your capital. What if your 2% limit is very close to the entry price of your stock. There are fairly good chances that such stop may get hit with a small noise in the market.

Calculate your risk with the lot size. If the risk is within your 2% capital limit, trade the position, else look for a stock which has a risk within your 2% limit or you may scale down your exposure. In this case instead of futures go to cash position.

Thank you, Praveen for flooding your knowledge in this forum on a big scale. I believe it is of great use to the members.

 

[Manu4U]

hI,

Could anyone please help me to understand the limit price and stop loss.

Today i have squaredoff an order with stoploss @ 2.75 and limit price @2.75.

for a maximium gain what should i need to set.

I am having one more doubt.

If market will stay above 3.00 than in that case will be squared off or not?

kindly eloborate with some example.

Thanks in Advance.

 

[d_s_ramesh]

Stop loss is the trigger to activate your order. Only if the price moves past your trigger will your order move to the exchange for execution else the order will get canceled after the days session is over.

In your example, if it is a stop limit order for a long position at 2.75 and the market stays at 3.00, then your order will not get triggered. You can place stop limit order at the same price, but not higher than stop loss trigger for sell orders and the opposite for buy orders.