Trailing Stop Loss Strategy — Step-by-Step Guide & Transcript

[00:00] So, I'm going to teach you an important strategy for those who trade in options buying. So that, they can make more profit with the strategy I'm telling you now.

[00:12] I didn't understand this until I came to the stock market. If we buy stocks to get gains from them in the short term, even if we buy stocks, futures, options or sell or sell in intraday,

[00:26] we should look at the entry price properly and set a stop loss. We should set a target that we shouldn't go below any point. I came to know about the concept of trialling stop loss very late.

[00:40] I mean, we set a stop loss at a point, we lock the profit. This is trialling stop loss, right? Trialling stop loss means,

[00:52] if our profit is moving, we can move and lose our target. This is a systematic way to do it. and if the stock moves in the direction we want it to move,

[01:07] and if it moves towards our target without hitting it, and if it shows us the profit, what mechanism should we use to lock our profit?

[01:22] if we want to take the money home, we should approach it in a systematic way. If you buy a stock and want to sell it after some time,

[01:37] this trialling stop loss will make you a better person from your current position. And now, the video we are going to talk about is a part of our equity series.

[01:49] already the introduction, basics of technical analysis is completed, and the important concepts in technical analysis, strategies, indicators, indicator based strategies,

[02:04] Now, we are in the last part of concepts, Why do we keep hitting in our stop loss? how do we lock profit in the stocks related to reversals without hitting the target?

[02:19] And by completing these remaining topics, And I am giving the link in the first comment, And the PDF copies, worksheets related to those videos,

[02:36] The link to join the trading group will also be in the first comment. friends, if you feel these efforts we are making are valuable,

[02:49] then definitely like our video and encourage us to make more efforts. At least, if you like the video in the point of view, then we will get the motivation to give you more efforts and good content.

[03:04] I have noted some data from the introduction. I will explain it to you, so that you can understand why we should know about the trialling stop loss. you have kept 90 stop loss and thought it was 120 as the target.

[03:20] If you take 1 rupee risk, is there a reward of 2 rupees? In fact, after you buy in 100, But what are you waiting for?

[03:35] You thought if it came up to 115, it won't come to 120, so you are waiting like that. Means, it went from 115 to 120 without going to the target. the target we set,

[03:51] If we keep hitting our stop loss, we will not know when the market will be reversal. Means, we will accept that we are not better than the market.

[04:04] What we do in this is, from 100 to 105, 110, 115, How many points will we move if we keep going?

[04:19] If the market is reversing at any point, And we will take some points home. Many beginners have made this mistake.

[04:34] But if the target hits so fast, In fact, from there, it will go to the top and start falling. If it goes previous high, we will sell it.

[04:48] Even the beginners' greed, So, from the reversal of our target stocks, Or, our greed,

[05:03] we can wait and see if it should go up. we can manage our psychology with this trial and stop loss. For stocks, like whether we buy or sell stocks,

[05:17] we can keep all these in one place. But when we buy options, we should be very careful. Mostly, beginners do option buying.

[05:29] If we have to do more calculations for it, So, I'm going to teach an important strategy for those who trade in options buying.

[05:43] than the profit they have made so far. So, before we talk about all these, Basically, I'll explain how I see trial and stop loss.

[06:00] You took an entry in 100 in a stock. You thought it was 120 target and 80 stop loss. If you have 20 points stop loss, you have 20 points target.

[06:13] You have two options. or you move your stop loss from 80 to cost, and your risk will become zero.

[06:27] Or if you want to play that momentum, and revise your target. You can increase your target as it reached the target you had before.

[06:42] You can move all the points you moved before, You can expect the stock to move from 140 to 160.

[06:54] If the target hits again from there, You can move your stop loss by moving 20 points. there are some points on the target we took.

[07:09] There is a gap. the target is achieved. We can move 8 points from the stop loss to the stop loss.

[07:22] Or we can move the next resistance or swing high. We can move the stop loss we previously tried. Most of the people follow point-based stop loss.

[07:36] Point-based stop loss is a simple technique that can be followed in everything. It may seem like percentage-point-based, There is a stock at 100 rupees.

[07:50] We use the first and second method in buying options. We can use the remaining options in everything, I'll tell you why later.

[08:04] That is, to go to 120. 10% of 100 means 10 points. 20% of 100 means 20 points is your target.

[08:17] It went from 100 to 120. You felt it went up to 120 and expert why not 140. Instead of waiting,

[08:30] Now, when it went from 100 to 120, From the present, keep 12 points as stop loss. even if your stop loss hits,

[08:44] You will be in profit for 8 points. What is 10% in 140? So, you can trial the option that is growing in momentum

[09:01] What happened in the previous? First, you thought it was 80. not even 20 points,

[09:14] You can change the target. There is no logic in this. the stop loss will go with the points you thought it was.

[09:28] let's say 160, We learned point based, percentage based. This is not used for option buying.

[09:42] or a pattern below, if you want to keep stop loss, I will explain it again when we talk about option buying.

[09:56] I will explain it simply, Let's say you entered a point or stock at this point. retraces a little,

[10:10] will the low form when it retraces? So, if we had kept the stop loss below when we took the trade, if we get confirmation that it is going up,

[10:23] If it forms high again, when it goes to the top side, we will try to move the previous stop loss to the top again.

[10:35] our first stop loss at 100 went to 115, then we will change the stop loss at 100 to 108, and moves to the top side by forming low,

[10:49] When will we understand that this is the low? again it moves in our direction. Means, we can move our stop loss only here.

[11:02] We will know only after going forward. based on price action let's assume you bought it.

[11:14] If the first support below closes, you will come. if it crosses 100 after 110, Let's say 98 will come like that.

[11:28] Similarly, will the resistances above exist? your stop loss will also move to the top side and kept the stop loss,

[11:41] This is the chart of the recent October ending. If you notice here, from many points, At any point, if you plan to enter,

[11:54] and you don't want to lose more, Again, if the market moves again, we will revise the stop loss there.

[12:09] another swing low, another time, the top side went to the swing low.

[12:22] you should have been able to continue the trade till here. and kept it here. Again, it moves till here,

[12:35] If I see, see in hourly time frame. If you have sold,

[12:47] if it comes above, this time your stop loss will move from here to here. Again fall, again retracement,

[13:00] every time your stop loss will keep being revised down side. we can try our stop loss based on swing highs and swing lows. In a particular time,

[13:14] or if we want more space, Now, every time the levels break while going to the upper side, the level maintained by our downside,

[13:28] one by one level will go down side. we can try it. clearly if a candle breaks out strongly,

[13:40] and next, the candle that is forming after that, we will keep this candle below stop loss. the previous strong candle,

[13:54] we can maintain it below stop loss, This is based upon price action. I follow swing highs and swing lows,

[14:07] And even based upon indicator, parabolic SAR and ATR, what happens by using these indicators?

[14:20] By using indicators, price moves along with the indicator. the indicator will be below,

[14:33] Or our option can be exited. we can use it as a trailing stop loss. Moving average can be 9, 14, 21,

[14:47] So, moving average, I am telling you again, and technical levels, you can use any of these indicators in this set of indicators,

[15:01] Now, I am coming to the main point. and even selling in options. Apply any method for trailing stop loss.

[15:14] If you ask me, beginners, simply follow the point system. if it reaches that target, Based on that percentage,

[15:26] how much percent of the stop loss is reversed upside down. how much percent of the stop loss is away from that price. But, option buying will not happen like that.

[15:39] people who trade weekly options have this idea. You bought it in 100. If you have it on Tuesday and Wednesday at 18,050,

[15:52] Will you get profit if it increases? It is near expiry. If you bought it in afternoon,

[16:05] it will be near 0 at 3,3:15, which is near the time of 2 o'clock. We are playing the momentum in option buying. So, people who sell options,

[16:19] you can hedge properly and protect them. particularly, people who buy naked options, There is a method we thought of in the beginning.

[16:32] In option buying, You will not get trapped in the reversal. What happens to candle based stop loss is,

[16:45] it will touch the candle, So, point based stop loss or percentage based stop loss, But, don't use this price action.

[16:59] and even candlestick is not that good. And, revise accordingly. And, don't use indicator based stop loss in option buying.

[17:12] If you have doubts about how to do it, You are thinking of removing it if it goes to 120. Will the greed increase if it goes to 120?

[17:25] We should have a logic to know what to do if it reverses. I will bring it to my cost this time. Let's say, your target is very big.

[17:41] Next resistance or next to your view. 100 to 150 means, And, even your stop loss is big.

[17:54] how can you move 40 points without moving? When your stop loss is big and your target is also big, Divide it into two parts or three parts conveniently.

[18:08] So, revise your stop loss for every 20 points you move. giving a particular space, if we revise our stop loss,

[18:23] We may not be able to capture the complete profit sometimes. We will come out in the entry price. we will take a small profit home.

[18:38] So, instead of fixing your stop loss, will work well in your options. stocks, futures and options selling in intraday,

[18:53] You can revise your stop loss. price action based, indicator based, But, in option buying, they will fake.

[19:06] and those as trailing stop loss, we are not playing price action. in expiry day,

[19:18] 20-30 points is enough. to move 20-30 points, we should be active,

[19:31] Then, we can get advantage. Let's assume you planned buy entry here. It will go from 100 to 150.

[19:44] when it comes to this point, If it comes to previous level, we are playing momentum.

[19:57] We will play the move that comes within short gap. or if it gets consolidated for some time, if it is based on point,

[20:09] using the techniques we talked about, through the trial and stop loss mechanism. do like the video.

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[21:01] Jai Hind!