Your trading plan must have an entry price, a price target, and a stop loss. In this article, we discuss how to determine stop loss for your option trades.
A stop loss is a price at which you decide to close your position and cut your losses. A simple way to determine a stop loss for a stock is to fix a price few points below an appropriate support level. Suppose you determine that the support level for Tata Motors is 541. You could keep 538 as your stop loss, which is far away from the current price of 610. Some traders prefer to keep tighter stops. For instance, a stop loss of 603 based on the low … Read the rest