The most common cause of retail trader losses isn't picking the wrong stocks — it's refusing to cut losses. A -50% loss requires +100% gain just to break even. Strict stop-loss execution preserves capital for the next opportunity.
Place stop-loss below key technical support:
Exit if the stock falls more than a set percentage (e.g. 7%, 10%). Simple to implement but may shake you out in high-volatility stocks.
If the stock doesn't move as expected within a set period (e.g. 5 trading days), exit regardless of P&L. Prevents capital being tied up in stagnant positions.
This is normal. A stop-loss isn't about being right every time — it's about protecting capital. A stop-out that's followed by a rally is still a correct risk management decision.
No universal answer. Short-term trading: 5-8% is common. Medium-term: 10-15% is acceptable but requires smaller position sizes.
Yes, but the criteria differ. Long-term investors should exit when the company's fundamental competitive advantage deteriorates, not just on price decline percentage.