Remember, the main aim is to make a profit across your entire portfolio. Imagine you owned $1000 worth of 5 different stock. You set a stop loss at 10% current market value; so if the value of a single stock drops to $900 you'll sell at that price. Even if you are wrong with 3 of the 5 picks (a $300 loss), you only need to make 15% on the remaining 2 stocks to break even. What if those remaining 2 stocks made 50% (which is very realistic if you pick your entry right).. You'd actually profit $700 across your entire portfolio despite the fact 60% of what you picked were duds! :)


Starting with 5 positions worth $1000 each: $5000
3 losing stocks lose 10% each: -$300
2 winning stocks make 50% each: +$1000
Total = $5700