Here are some points to consider that I use in my trading.
Stops
1. Always set an initial stop (i.e. when you enter the trade). If this is breached its an admition that your analysis is wrong and takes maturity to execute. If you hit your stop cut the trade and move on to the next opportunity without hesitation.
2. There are thousands of way to set a stop. It could be based on previous support levels or volitility based calc such as an ATR, Bollinger or STDEV.
3. Decide whether your stop is triggered intraday or on close (to exit the next day). THis can make a big difference on profits.
4. Decide whether to have an active stop in the market or a pre-defined stop not in the market but tells you when to place a sell order. The latter requires high levels of discipline to administer.
But there more...Portfoilio Management
5. Study up on position sizing to spread risk (i.e. Fixed vs. Fixed Fractional sizing). In other words, how to you allocate your capital to each trade and what exposure does it have to the market.
6. Know your portfolio heat. i.e. If you were stopped out of all trades simultaneously, what is your total exposure...then multiply this by 2. If you are not prepared to wear this loss then your strategy has too much inherent risk.
7. Don't use margin to increase your position sizes. Instead take additional positions with margin. The result is your individual trade risk stays the same and only the portfolio heat increases.
8. Trailing Stops. Decide on how are going to lock in profits (and exit), after all thats why we are here.
