Stop loss is important when you trade stocks because it helps to limit potential losses on a position.
Trading stocks carries some level of risk, and even the most well-informed and experienced traders can experience unexpected price movements.
A stop loss allows traders to set a predetermined level at which they will exit a trade, in order to prevent further losses.
Additionally, stop loss allows traders to have a better risk management strategy.
Without a stop loss, traders may hold on to a losing position for too long, hoping for a price recovery that may never come. This can lead to larger losses and can be emotionally taxing.
Stop loss also helps traders to maintain discipline and avoid emotional trading.
By having a predetermined exit point, traders are less likely to make impulsive decisions based on fear or greed.
In summary, stop loss is a crucial tool for managing risk, protecting capital, and maintaining discipline in stock market trading.
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