Importance of Trailing Stop Loss

It is human mentality to be afraid of loss and this fear becomes a guilt feeling, if one is not able to capture the profit. This trailing stop loss holds all the more importance for day traders and to an extent it can be applied for long term traders who are basically investors.

In day trading one can make profit if one can follow the profit making tips by utilising the trailing stop loss technique. This technique ensures that one is always ending with profit in those calls which had started giving profit.

However try to keep trailing stop loss as a percentage and this percentage can be as per your risk appetite. For normal retail day traders; they can trail the stock with a one percentage point and long term traders may trail by keeping the stop loss a bit below 50 days moving average of the stock. This way you will be able to capture the trend to the fullest and rarely situation will occur where you have to see your profit being converted into loss.