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The three basic levels you need to know before entering any trade !!

The word stop loss is an order to exit either a long or a short position once the price of the position crosses a particular predetermined price level. It is a tool which help investors to control their risk of loosing money more than their pocket allows. Mainly used in intraday trading. It can prevent small losses becoming the large ones. It can save you from unexpected news that come in the market because of which there is a sudden price action against your position. The stop loss facility is free of charge and no higher commission is charged. Traders can trade with the time freedom and freedom from monitoring the same stock again and again.


Most of the times investors have experienced it that if they do not placed the stop loss order and assumed that they will exit the stock manually once price reached their exit level, the have suffered more losses just because they could not exit on time due to higher volatility. Here the stop loss comes into picture. Though many investors think that a stop loss order is only associated with a long positions, bu tit can be used for a short position too. Moreover there are no rules set up for placing stop loss orders. Traders use very tight stop losses. 

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