How to set Stop Loss (SL) orders ?

Every investor on stock market loses his money. The key to success is to win more than lost, and the only thing you can do in this case is choosing the right levels of Stop Loss (SL). Understanding of where to set the SL order is important even before opening the position - because of the possibility of adjusting the size of opening positions to the SL.

So without any problem you will be able to determine the capital percentage risk in every transaction. All theory is that the Stop Loss order should be set in a logical place. Breakout of such spot will negate the reason for opening the position. Level near the opening price will be the better position because the risk will be limited.

Defensive order for the consolidation breakout transactions.There are two places where orders can be set after breakout from the consolidation. Position is open by orders BUY STOP or SELL STOP and SL should be set in the middle of the previous consolidation or at the opposite ends of consolidation.

Spoiler:

Defensive order for the trend following transaction. This type of trading is also called SWING TRADING. Opening the position takes place during corrections in accordance with the main trend, and SL order should be set above the top of the last correction (in the case of a downtrend). Then, every new high of correction opposite to the main trend is a place where SL should be moved.

Spoiler:

Defensive order for the counter trend transaction.There should be a clear reversal trend pattern or important macro data. Example: Double Top or Head And Shoulders. In example below, it would be difficult to open profitable position. For example because of the publication of macro data that has changed the trend - SL should be set right above the top.

Spoiler:

More sophisticated methods of controlling losses are:
ATR (Average True Range - average move of asset at a specified time interval) - SL is set as 2-times or 3-times ATR.
Margin Call– account deposit equals the sum that trader can lose. The deposited amount should represent only 2-3% of the total capital.