How to Choose the Right Stop Loss

This stock trading question about how to choose the right stop loss comes from Samraj D. who asks:

“I am from India, trading in Indian stock markets. Since fixed price stop loss is triggering very often, [can you suggest the] best stop for smaller time period:

Donchian Channels
Bill Williams * Fractals * Support / Resistance
Keltner Channels
ATR based indicator by Dan Steinberg”

The answer to this question relates to any aspect of trading, whether it be initial stops, trailing stop, profit targets or even entries.

Test it.

A computer simulation will give you a non-biased, non-emotional, sample significant and measurable answer. Without such an answer you’re merely guessing, exposed to your own preconceived judgment or opinion and will, ultimately, continue traveling in a circular loop of changing tactics, also known as The Beginners Cycle. The only way to break that cycle is gain mathematical insights from running simulations. By understanding the outcome correctly will allow confidence to use the technique successfully over the longer term. We do all our testing using RealTest Software and Norgate data.

Have a question for the team? Drop us an email here.