The Stop-Loss

Before you even consider entering a trade, you should determine your stop-loss point. Your stop-loss point should be set at a price that you're willing to sell your stock at should things turn bad. The price you pick will vary depending on your financial position and the particular stock being considered.

You may want to set a stop-loss exactly 8% under your purchase price, or you may want to set it just below some clear resistance in a chart (if the stock falls below the resistance level, you can be fairly sure things will continue South for a while). The most important thing is to test your system. If you set your stop-loss too close, you'll never be in the game when the stock turns good. If you set your stop-loss too far away, you'll end