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Stop LossesThe stop losses are a way to help stay on track and are the single most important key to money management It's the level at which you will close a trade on the basis that it has gone too far in the wrong direction, and therefore negated the reason for being in that trade. Always use a stop loss when trading; it can be too easy for a 300$ loss to become a 5000$ loss. A good trader takes a small loss and goes on the next trade. Remember that trading capital is your business; if it burns there is no insurance. Once you have entered a trade immediately places a stop. This safeguards you from losing your entire account. If you don’t use a direct platform to execute your trades it is wise talk with your broker about how they execute your stop. Some brokers execute stops differently. Your stop loss policy can be set in a number of ways. Some use an actual figure (e.g. 100$), and some a percentage figure i.e. they do not want a position to go more than a certain percent, say 5% in the against them. Others may use technical analysis principles to set stops. This is the preferred method of trading. If I enter a trade on the short side after a signal, as in the example below I will place my stop in the next nearest resistance. The opposite is true for the long side. If I enter a trade from the long side I will place my stop at the next lowest support. It’s important to insure that your stop loss is canceled if you close your position. I mention this, as you would not be the first trader, which closed a position only to forget that they still had a stop in the market, which would take you back into a position. The most important thing, however you approach the decision, is to know where you will cut a losing position before entering the trade. Set the rules and ALWAYS follow them. For most traders entering a position is no problem, the exit however is by far more difficult. There are many exit strategies but the main ones are the following: 1.The initial stop: The initial stop loss is your insurance against big losses and by far the most important aspect in trading overall. You should never enter a trade without knowing exactly where your initial stop is. Not keeping stops is the biggest reason for potential failure. 2. Partial gains: Taking partial gains means to sell part of your position after the first “reasonable” move in your favor. A reasonable move would be a move into a resistance area (for longs). This resistance can be of technical nature or of psychological (whole number resistance). Partial gains play an important role in my trading. I have seen many of the most successful traders using this concept. Taking partial gains is especially powerful in conjunction with selling the stop for the remaining shares to breakeven. Many traders have trouble with letting profits run. Taking partial gains can be a tremendous help because of it’s very positive psychological influences. . imagine being in a position where you already took partial gains and the stop for the rest of your position is set to breakeven. .You can let profits run without having to be afraid of potential losses. 3. The breakeven stop: This stop is getting interesting once your trade is inside positive territory enough so that you won’t end up loosing on it, but there is still more room for potential gain. Breakeven means to set the stop just below the price where you initially bought the stock or where your entry price was set at. Some traders start using breakeven stops once the stock has successfully held above my stop area (for longs) or it has risen a significant amount. 4.Trailing stops: Trailing stops come into play after you took your first gains and the stock has successfully taken the first area of resistance. The stop is set just under the area of the last resistance. Moving averages are also an excellent area where to place trailing stops. In my trading plan I will go in much more details about exit strategies and believe me you will love it! Now let's check out the psychological aspects of trading. 
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