The last 1 month or so saw the decline of the composite index only to bounce up for a bit and then decline again. I believe most counters would have seen similar or more decline.
The Stop Loss Rule though very important is only the first half of the exit plan. Being able to determine your stop loss before entering a trade puts you slightly ahead of mass market retail traders, as most I believe do not assess their trade risk and stop loss prior to buying. They only hope and aim for the profit.
The second half of the exit plan rule which is of equal paramount importance is TAKING ACTION on the stop loss rule. In short, its about selling when your stop loss is hit. This part is more difficult to execute. Why? Because emotions and hope can come into play. And when that happens discipline in executing the stop loss takes a back seat. Never ever let your EMOTIONS and HOPE cloud your trading rules.
When you breach or lower your stop loss, you are essentially exposing yourself to a higher loss risk. Allowing this leeway can be contagious as it may lead to further lowering the stop loss and eventually when u have to bite the painful bullet and sell at a much lower price you realise that you could have lose less if only you had stuck to your original stop loss and act upon it.
Constant adhering and acting upon your stop loss rule will ensure longer survival in your trades and allow you to calculate and limit your risk.
