When to Cut Losses on a Stock Trade

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You sell when it breaks support and buy back at highs when it breaks resistance. Buy high sell low got it!


Awesome. Now do one without a perfect chart. You know where it breaks support then reverses. Like what really happens.


“How to train yourself to hand over your money to smart traders” Investing in real stocks for the long term is much better advice.


One thing to note is that market likes to shake off stop losses near support before heading up. Case in point SPY on Thursday and Friday: Thursday session ended after bouncing off the support at $300. Friday session opened much higher but then confirmed the support bouncing off it at 11:30am. Based on this post, it would be a good idea to enter long position in SPY after the bounce around $301 and set a stop loss around $299. After all, SPY confirmed double bottom. However, later in the day SPY dropped down to $298.6 before reversing trend and ending much higher. This would have triggered your stop loss order leaving you at small loss and watching SPY climbing up as you have expected. I think the main problem is how far below support to put a stop loss order. Putting it too low you risk triggering it at the bottom of the dip, while putting it too high will trigger too early.


I double up where in the chart you say sell. For instance I’m increasing my shares of SPXL and TQQQ as they were on fire sale this Thu. I may add more on Mon and Tue so my portfolio is set for the planned Wed and Fri rally next week that could put us in record territory for S&P.