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Chandralekha Desai made post

Why do stop losses become so important for traders?

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Khushi Patel answered.
2 years ago

The most important consideration for a trader in equities, derivatives or commodities is not about making profits but about protecting the capital. As a trader, you always want to risk only a small portion of your capital on each trade. If you have taken a trading position and the price has moved against you, it means that your position was wrong in the first place. Instead of waiting in hope, it makes more sense to book the loss and move on. Stop losses ensure that you can survive as a trader for much longer.