Can anyone tell me what should be the % stop loss should be maintained for Sensex stocks? ( since one has to keep losses small...)

Thanks
Ragav

It's not possible for give a blanket stop-loss figure for all Sensex stocks.

The stop-loss depends on a lot of factors:

-volatility of stock.
-your trading time frame.
-technical position of the stock.
-overall market conditions.
etc.

If you are short-term trader, your stop-loss should be much closer, compared to a medium-term trader.

A more volatile stock deserves a wider stop-loss, compared to something like Infosys, which barely moves.

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Thanks a lot for your replies, Alchemist.

For a more volatile stock (like ICICIbank), how do we find out if it is really on a downtrend or just going down on a minor pullback? In cases where the stock is neither close to its support or resistance levels, how should we go about setting the stop loss? I am using Reliance Money; in the trading platform I am unable to set up a stop loss during the buy order itself. Does it mean I have to put a stop loss order daily after the market opens?

Thanks
Ragav

You need to put stop loss every trading day! I dont think that you

can put stop loss of your desired value and forget for months!

Even you need to monitor your stop loss to gain or narrow down your losses

within the days too.. This may happen if there is abnormal/ more volatile trend is seen.

there is no perfect way to ascertain a trend.

the most reliable trend-indicator is the moving average.

if the stock price is below its short-term moving average, you can assume that the short-term trend is down.

===================================

if you can't find a reliable stop-loss near the prevailing market price, use a percentage stop-loss.

unless a stock is making all-time highs or all-time lows, there are always supports and resistances around the prevailing price.

there are

- earlier highs/lows (short-term/medium-term/long-term)
- high volume zones, where lot of trading has taken place in the past.
- Fibonacci levels.
- trendlines.
- pattern supports/resistances/targets.
- moving averages.
- round figures.
- unfilled gaps.

etc.

===================================

You should be able to enter a stop-loss order during market ours. I will check Reliance Money tomorrow and let you know.

As far as Indian markets are concerned, you have to put a stop-loss order daily.

GTC (Good-Til-Cancelled) orders aren't allowed in Indian markets.

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Hi Alchemist,

I am able to enter a stop loss order during market hours.

I just wanted to know whether I can set a stop loss (Good till canceled).

Since you mentioned that these (GTC) orders are not allowed, is there any way we can protect ourselves when the open price of a stock is much lesser than the previous day's closing price?These type of price movement invariably misses the stop loss order.

there is no solution to such a gap-down.

a gap-down means sellers are selling at a price which is much lower than previous day's close.

unless the stock bounces back, there is no way the stock can be sold at the previous day's levels.

in such a situation, the trader has to make a decision whether - he wants to sell at the market price

or

wants to wait in hope of a better price and increase his loss potential.

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