The stop-loss price depends on your risk tolerance, trading strategy, and market conditions.
Some factors that can help you decide where to set your stop-loss are:
- The volatility of the stock: A more volatile stock may require a wider stop-loss than a less volatile one.
- The support and resistance levels: These are price levels where buyers or sellers tend to enter or exit the market. You may want to place your stop-loss below a support level if you are long, or above a resistance level if you are short.
- The percentage of your account: You may want to limit your risk per trade to a certain percentage of your account, such as 1% or 2%. This can help you manage your overall risk exposure.
To calculate your stop-loss price, you need to know:
- Your entry price: This is the price at which you bought or sold the stock.
- Your position size: This is how many shares you are trading.
- Your risk per share: This is how much you are willing to lose per share if the trade goes against you.
The formula for calculating your stop-loss price is:
For long positions: Stop-loss price = Entry price - Risk per share
For example, if you bought 1000 shares of stock at RM0.45, and you want to risk RM50 on this trade, then your risk per share is RM50 / 1000 = RM0.05. Your stop-loss price would be RM0.45 - RM0.05 = RM0.40.
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