Stock Trading Strategies – Part 3 Exit Criteria

Parts 1 and 2 can be viewed by visiting http://www.10000elephants.com

As discussed in Part 2 – Exit Criteria, there are 2 things that are essential as part of an exit strategy.

- Protecting your Capital
- Creates Profits

Protecting your Capital – If you choose to buy a stock, then the stock drops like a rock, you don’t want to go down with the ship. As soon as you purchase the stock, you need to set your stop loss. Your stop loss is a predetermined value of the stock that you have set as your selling price, if the stock decreases to that price. It is the maximum amount of loss that you are willing to risk when you purchase your stock.

As we have said in previous articles, you don’t know for sure if a stock will increase or decrease in value after you buy it. But if it decreases in value, you want to be able to get out just in case it keeps dropping.

This is why you must set a stop loss. But how you do determine the price you should set as a stop loss?

This is a personal thing and different people will set stop losses at different levels based on different reasons.

You need to set a stop loss that you are comfortable with and is based on the initial buying criteria you have determined.

Visit http://www.10000elephants.com to learn more about trading strategies and to purchase our 10000 Elephants Trading Strategy.

Over 90% of our trades using 10000 Elephants are profitable.