- April 2014
- Posted By Ninoslav
- 0 Comments
Whatever position you may choose, either long or short, the thing that will ultimately decide your fate is a sound trading policy. So, do you have such a policy in place before you seek these Stop Loss Trading Tips for Short Positions? If not, there has to be one, and it has to take certain factors into account.
And those are? For one, accepting the truth that nobody can accurately predict the market; only probabilities can be forecast. So, chances of stop-loss orders not suiting your requirements in unfavorable market conditions are possible, and you may not get that expected bargain. So, be prepared for “stops being run” – a term used to describe situations where prices may begin to rise after reaching the stop-loss limit. If you hadn’t thought that such a term or a situation exists, you need to think over and re-formulate.
What about these tips that would help?
To begin with, keep this in mind when opting for short positions – you gain when the rates fall, and lose when they rise. So, in a short position, if you are planning to go for trailing stops, it is advisable to lower your stops while the stocks are on a decline. And as in for longs, you can use ATR data here also for shorts, to fix your limit.
If you are into Daily Trading practice, it would advisable to begin your stop limit a notch above the previous day’s high position, considering that day went well. Then one can gradually move the limit closer to the current day’s opening position. And that concludes what little could be offered on Stop Loss Trading Tips for Short Positions. Please read into “What one needs to know before starting with Online Stock Trading” for food for thought, if needed.