/biz/ - Business & Finance

>>11721166
Stop losses are generally used in conjunction with TA. You see a chart pattern, identify your entry point, and identify a price where the pattern you identified would be invalidated. Say you've got a bull flag going on a chart like pic related. You can either buy before the breakout, after breakout confirmation, or you can buy the bull flag itself somewhere in the pennant range. Stop loss goes below the range of the pennant. The idea being that a drop below the established pennant range is a bearish indicator and a higher likelihood that the bull flag pattern will fail. If the bull flag fails, you want out.

This is mainly a day and swing trading technique.