Why Stop Loss Matters
Stop loss protects your capital by automatically exiting losing trades. Without stop loss, a losing trade can wipe out multiple winners. Professional traders never trade without a defined stop loss.
Percentage-Based Method
Simplest approach: Risk 2% from entry, target 6% profit (1:3 ratio). Works well for trending markets. Consistent risk percentage across all trades helps with position sizing.
ATR-Based Method
More sophisticated: Stop Loss = Entry - 2×ATR for longs. Takes volatility into account. Wider stop losses in volatile stocks, tighter in stable stocks. Preferred by technical traders.
Support/Resistance Method
Technical approach: Place stop loss just below support (for longs) and take profit at resistance. Most reliable in ranging markets. Requires good technical analysis skills.
Risk/Reward Ratio
The most important metric. A 1:2 ratio means you earn ₹2 for every ₹1 risked. Even with 50% win rate, 1:2 ratio is profitable. Aim for 1:2 minimum, 1:3 ideal.
Exit Strategy Tips
1) Always define stops before entering. 2) Never move stops against you. 3) Take profits gradually (scale out). 4) Trail stops after 50% profit. 5) Use time-based stops too.
⚠️ Disclaimer
The figures provided by this calculator are estimates based on the inputs you provide and standard financial formulas. STOCKCALC.IN does not offer investment advice. Please consult a qualified financial advisor before making any investment decisions.