What are Stop Loss Strategies? | Tradestops What are Stop Loss Strategies? | Tradestops

What are Stop Loss Strategies?

You are here:
< All Topics

How do you keep emotions out of investing? Create and follow a good exit strategy!

It’s been widely suggested to investors that you need to maintain a stop loss, and many have recommended a specific trailing stop percentage as a blanket for all stocks.

This could be a good strategy. But…

Is it a good idea to use the same percentage trailing stop for a safer stock like Johnson & Johnson as compared to a more volatile stock such as Tesla?

TradeSmith has taken the typical trailing stop to another level. Instead of a blanket percentage, we have created algorithms that evaluate each individual stock’s behavior to discover their personal volatility levels (also known as the Volatility Quotient, or VQ%).

This was a first, but it wasn’t the end! We took it another step further and created an indicator system known as the Stock State Indicators.

Here at TradeSmith we believe in empowering our users to choose the strategy that best fits their risk tolerance and investing goals.

When you create a position in TradeStops, you have many exit strategy options at your disposal.

What Stop Loss Strategy would be best for you?

Well, this all depends on your personal investment strategy. You may be willing to take on a riskier position while your friend may only want to have minimal risk. TradeStops’ suite of tools can help both you and your friend decide on the best Stop Loss Strategy.

Let’s look at an example.

Say you had purchased Smith & Wesson (SWHC). It’s a pretty volatile stock, and you notice that it is already stopped out based on the Stock State Indicators. You still want to stay with it, so you could employ the Volatility Quotient stop loss strategy.

stock information

This allows you to stay with your position while also taking any emotion out of the position.

Now, your friend is not willing to take on as much risk. He has invested in O’Reilly Auto Parts (ORLY). He decided that he wants to be stopped out based on the Stock State Indicators, so he has set that alert for his position.

stock information

Once O Reilly Auto Part’s gets stopped out and your friend is alerted to that, he could then choose to sell the position.

What’s the Point?

The point is to have a Stop Loss Strategy and stick to it. If your strategy was to sell when “X” happens and “X” happened, you would want to act on it.

TradeStops can help you do this with its unique suite of tools that act as a call to action. The tools help you make sound decisions even in the face of emotions such as greed, fear, or attachment/loyalty to a particular company. TradeStops’ algorithms see no emotion. This would help you to maximize your profits and minimize your losses.

So, decide on your Stop Loss Strategy, and stick to it. Don’t be blinded by emotion. Maximize your profits and minimize your losses. It’s so easy.