Stoploss Big Mystery-3 Golden Keys

Discuss Stoploss Big Mystery-3 Golden Keys at the Risk & Money Management within the; Hi all, Trading is a zero sum game For every winner there must be a ...

Go Back > METHODS & STRATEGIES > Risk & Money Management

Risk & Money Management Discuss risk and money management techniques and methods to protect your trading capital.

Thread Tools
Old 20th November 2006, 07:03 PM
Posts: n/a
Default Re: Stoploss Big Mystery-3 Golden Keys

Hi all,

Trading is a zero sum game For every winner there must be a looser So why bother some idiots if trade without stoploss.Also i belive trading as a competation not a team sports so i wonder if one will share a really working system to others sure i wont


Reply With Quote
Old 21st November 2006, 07:41 AM
Join Date: Jan 2006
Posts: 17
Thanks: 4
Thanked 0 Times in 0 Posts
srisrini is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys

Dear Sir

Thanks you for your comprehensive writeup demystifying Stoploss.

Expecting more!

With regards.
Reply With Quote
Old 21st November 2006, 08:52 AM
Join Date: Jan 2005
Posts: 14
Thanks: 0
Thanked 0 Times in 0 Posts
Ferdous is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys

Excellent write up. Thanks for wonderful contribution.

Reply With Quote
Old 22nd November 2006, 12:45 AM
Join Date: Jun 2006
Posts: 2,138
Thanks: 658
Thanked 3,021 Times in 1,013 Posts
oilman5 has a reputation beyond repute
oilman5 has a reputation beyond repute
Default Re: Stoploss Big Mystery-3 Golden Keys

rvlv, in a simple nutcell u show 2fool[confident hopeful investor] and aggressive,uncertain ,sometimes LUCKY GAMBLER..definitely you belong rarebreed cautious trader who smiles with money, helps all learners
Reply With Quote
The Following User Says Thank You to oilman5 For This Useful Post:
DanPickUp (20th August 2010)
Old 26th November 2006, 09:20 PM
Join Date: Nov 2006
Posts: 11
Thanks: 0
Thanked 0 Times in 0 Posts
stocks4ravi is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys

I have just one query about this STOP LOSS....... in my ICICI-Direct account why can't I put Stop Loss less than the Last Traded Price.

Kindly help


Last edited by stocks4ravi; 26th November 2006 at 09:21 PM. Reason: Forgot some words
Reply With Quote
Old 4th February 2007, 04:34 PM
Join Date: Jan 2007
Posts: 70
Thanks: 0
Thanked 1 Time in 1 Post
ppvsin is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys

[COLOR="Magenta"]Trading is a zero sum game For every winner there must be a looser So why bother some idiots if trade without stoploss.Also i belive trading as a competation not a team sports so i wonder if one will share a really working system to others sure i wont

Excelent quote by amarnath!!

I think you understood very well trading game and making money.

Last edited by ppvsin; 4th February 2007 at 04:43 PM.
Reply With Quote
Old 13th April 2008, 10:14 AM
Join Date: Oct 2006
Posts: 454
Thanks: 0
Thanked 47 Times in 31 Posts
raosrinivas will become famous soon enough
Default Re: Stoploss Big Mystery-3 Golden Keys

I was going through "Basics Of Investing in Stock Market by Saint" pdf's by ecko. in chapter 07a stop losses, adding a stop - when a positions goes against them , when people buy in more it is called "Averaging Down" and not "Dollar Cost Averaging" .

Dollar Cost Averaging is investing an equal amount every month in a stock / market, irrespective ofm if it goes down or UP.

so by saint may have a lot not by saint i guess.

Originally Posted by rvlv View Post
STOPLOSS -BIG Mystery -and its three golden keys

About stoploss

Mystery of Stoploss
One of the great mysteries of trading is the dreadful stop.

“what kind of stops should I use?”

The philosophy outlined here regarding stops is very different than most others. when you learn how to use stoploss wisely, you discover that stops don’t have to hurt.

Stoploss orders are the medicine of trading.

When your trade is sick, stops are there to heal it.
The big question is whether you like to take the medicine before you get sick
as a preventive measure or you wait till you really get sick,and then use the medicine. Natural choice seems to the part two.

There a few ways of using stops:

1. “No Stop” –specialist
What do you call a trader that doesn’t use stops?
An investor.
When a trader lets a trade go against him, he gets married to the stock, starts looking at fundamentals then becomes an investor.

I have seen people, especially six years ago, buy a stock at 100 and still hold it today, even though it’s a penny stock today.

2. “Random stop” or “Gambling stop” –

These happen when a trader knows how much money he wants to risk on a stock, his “bet” on the stock, and that is his stop.
Buy ABC stock with a 500 stop, because that is all they can allocate for this trade. These PEOPLE think trading as gambling, they put their money on the table and forget about it.

The problem with this method is that it is not a method, there is no reasoning behind the placement of the stop.

3. “Adding in stop” –

Some traders keep adding in money into their position as it goes against them. This is also called “Dollar Cost Averaging”.
When people begin trading they think that adding money to a position lowers your cost on it and, therefore, allows you to buy more shares at a lower price. Any Investor, who liked ABC at 60, surely will like it so much more at 50, right?

The reasoning behind this method is very dangerous.

You buy 1000 shares at 60, buy another 1000 at 59, buy another 1000 at 58. Now, your average cost is 59, not 60 as you originally wanted. The stock only has to jump up a single for you to break even, not two.
Problem comes when the stock keeps FALLING and you are now stuck with 3000 shares on the wrong side of a breakout.

People using this method wipe out their accounts. Traders will become investors. If not on the first 20 trades, then on the 21st that would wipe them out.
It only takes one large loss to devastate an account and devastate the trader.

Stops are like medicine for your trading.

The longer you take before you swallow the bitter pill, the worse your condition is going to be.
Preventive medicine works so much better, it prevents small weaknesses from becoming serious diseases.

Trade this way if you agree it is better

Follow this method of stops =it is very simple,

Always exit a trade
when the reason for your entry no longer exists.

Take Notice We said Exit, not stop.

We do not take stops, we exit.

At times it’s a negative exit, but it is still an exit, not a stop.

A “stop loss” stops your loss, we are not interested in the trade becoming a loss.

Explain…as follows


If you have done your analysis right, you should be able to pinpoint an entry.
An entry is a trigger

that starts a trend,
starts a wave in a trend,
starts a bounce,
starts a fade or a break out.

BE accurate with your entry, AND your exit should be very simple.

If you entered a trend, you exit when you know that the reason for your entry no longer exists, when the stock refuses to start your trend.

If you entered a breakout, you know the reason for your entry no longer exists when the stock returns back into your consolidation.

So how much is that?
Your stop, or negative exit, (if you did your home work and pinpointed your entry,) is Noise + Spread.

Noise is the normal fluctuation of the stock and spread is the difference between bid and ask.

Basically, if you add them together, it is the amount that the stock can pull back before you know that your entry is wrong.

For example, in day trading, most of our negative exits are less than 1 RUPEE Most of the stocks that we trade have less than A COUPLE OF RUPEES spread and noise. In Swing trading, most of our negative exits are less than 10 TO 20 RUPEES(TEN TIMES plus THAT OF DAYTRADING) for the same reason.

Some people day trade with a RUPEE stop or even two or three rupees. If you do your home work and can pinpoint your entry, how many 1 rupee negative exits can you take before you equal one point or two points?
Imagine having 10-20 attempts for the price of one.
Three keys
There are three keys to success here:

1. Pinpoint your entry – You need to know exactly where to enter.
2. Know exactly where the reason for your entry no longer exists –Where on the chart does price have to go to invalidate your entry?
3. Re-entry – If the stock comes back and your setup is still valid, make sure that you re-enter.
Most of us pay less than 100 in commissions, which is a lot less than a devastating stop loss of multiple points.

If you have to pay 500 plus rupees for a trade that didn’t work, it is a business expense, not a stop loss. It protects you financially and psychologically. It allows you to re-enter the trade without any damages.

If you exit with an expense of 1000, it will do a lot less damage than several thousands or your whole account.
How would you feel if you spent a few hundred bucks on a trade vs. lost several thousands on a gamble?

Traders need to get educated how to pinpoint their entries and know exactly when the trade is working or not, in order to keep stops down to business expenses, instead of serious losses.

The secret to longevity and prosperity in trading is
knowing why you are entering,
pinpointing your entries and
preservation of your capital.

Preservation of capital is always more important than capital appreciation.

Hope this helps your trading in some way.

Dedicated to maximizing your profits,

Reply With Quote
Old 13th April 2008, 01:17 PM
Join Date: Oct 2006
Posts: 445
Thanks: 14
Thanked 20 Times in 18 Posts
suba_stocks is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys

rvlv!.....great article and good presentation ...i am really delighted.

thank you

Reply With Quote
Old 13th April 2008, 03:14 PM
Join Date: Sep 2006
Posts: 86
Thanks: 64
Thanked 12 Times in 8 Posts
bamks is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys


Highly informative article with some new insights.

Reply With Quote
Old 13th April 2008, 03:31 PM
Join Date: Aug 2007
Posts: 6
Thanks: 0
Thanked 0 Times in 0 Posts
gourav_dubey is on a distinguished road
Default Re: Stoploss Big Mystery-3 Golden Keys

good , postt great man


Reply With Quote


Advertise Here

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads for: Stoploss Big Mystery-3 Golden Keys
Thread Thread Starter Forum Replies Last Post
Stoploss Is My Boss rvlv Trading Psychology 8 16th February 2009 12:38 AM
Trailing Stoploss Indicator karthikmarar MetaStock 5 5th May 2008 08:54 AM
Stoploss and co -simple formulae rvlv Trading Psychology 1 4th June 2007 01:40 AM
Is There A Software To Calculate Stoploss?????? sandynisha Software 6 28th March 2006 01:01 AM
ATR Based trailing Stoploss Indicator indianbullbear MetaStock 1 16th November 2005 12:58 AM

All times are GMT +5.5. The time now is 02:54 AM.

Indemnity, Disclaimer & Disclosure Notice:
• By visiting you automatically indicate that you agree to our Forum Rules, Indemnity, Disclaimer & Disclosure Notice and General Content Disclaimer Notice and indemnify, its associates and related parties of all claims howsoever resulting from the usage of the forum/site.
Disclaimer: Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility. You are recommended to make appropriate enquiries and seek appropriate advise before sending money, incurring any expenses, acting on recommendations or entering into any commitment in relation to any advertisement published here. does not vouch for any claims made by the advertisers of products and services. will not be held liable for any consequences in the event such claims are not honoured by the advertisers. will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of any information by anybody mentioned anywhere on this site.
Disclosure: The information in this forum is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.
• All names or products mentioned are trademarks or registered trademarks of their respective owners.
General Content Disclaimer Notice:
In light of our policy of encouraging candid, open exchanges of views and the rapid distribution of information originating from many sources, cannot determine the accuracy or legality of any information that may be uploaded to the forum. Opinions, advice and all other information expressed by participants in discussions are those of the author. You rely on such information at your own risk. You are urged to seek professional advice for specific, individual situations and not rely solely on advice or opinions given in the discussions. Since is an open and free discussion forum, any comments made by members of this forum in their posts reflect their own views and not of the owner or administrator of Thus the owner/administrator indemnify themselves of all claims whatsoever and will not be liable or responsible for any members comments/views in this forum Although we constantly delete all irrelevant content and/or SPAM, if you should find any objectionable or offensive posts made by members of this forum which you would like to bring to our notice for removal then please Contact Us.

Copyright © 2001 - , All rights reserved.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268