Importance of time based stop loss

Normally we see stop losses that are on the basis of price but it is also important that we maintain a time based stop loss. Have a time period for stocks to see the performance, if it doesn't perform, sell and switch (you can always buy later!) to a better counter.

In this chart we can see KANSAINER has not given any returns since years. In fact on the date of posting, we are still at levels that were seen in June 2017. This share has been range-bound and has not triggered stop losses on longer time frames, however, the price correction (for whatever reason) has costed its investors (assuming they remained invested) a lot in terms of opportunity cost.

Hence, it is always advisable to have a time-based stop loss according to your system and appetite.

Jatin Agarwal
Founder and CIO at MoneyCraft (SEBI RIA)
Creator at The Bull of Dalal Street (YouTube Channel)

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