Theory Of Stoploss
During our service people ask about the uncomfortable stoploss,target ratio. Please keep the following pointers in mind:
We generate calls through technical analysis and therefore it is in best of intrest for us to generate stoploss point which respects last week’s, last day and last hour volatility. We cannot fight from the market for stoploss, so please put the stoploss as recommended
Since we generate calls in crudeoil, it is in best of intrest to book some profit in 15-20 points and then maintain SL at cost and wait for further targets. You cut down risk in two ways:
a) You book some profit early so you are reducing your stoploss in monetary value
b) You are maintaining SL at cost or trailing stoploss only after achievement of first target
No advisor will want his client to make losses in the market, It all depends on the market and market levels, so kindly be patient enough and keep trading
Please Understand the following theory carefully :
Let Us take the example of HNI package, We generate a total of 25 trading calls in the month ( Including Recovery calls)
*Lets Say you trade in 2 lots of crudeoil
Target 1 is of 20 points
Target 2 is of 40 points
You have to book 1 lot at first target and then maintain sl at cost of second lot and wait for second target.
Now if Both targets achieve, Then you would earn a profit of 6000 rs ( 2000+4000).
*We give 25 trading calls in a month ( 22+ 3 recovery)
For example if market moves down 40 points since the morning in our selected trend only 40% of the times ( Since all are calls are generated till maximum 10:15 am), then you would receive 10 calls in a month, where your both targets are getting achieved.
If you recieve 10 calls, then you are making a profit of Rs 60000 ( Gross )
Lets Say, that you do not earn anything in the remaining calls ( 25-10=15). That is, If 3 stoploss triggers and 12 calls are consumed in the recovery of those calls.
Still You are in Rs 60000 gross profit! Let’s assume that another 10-15 thousand goes into brokerage and stuff, still you are in good profit of Rs 40-50 thousand
* Please note, that we have used logical sense in above calculation, therefore kindly try to understand the logics and reasoning behind the calls.