till now never understood what is closing basis Stop Loss which lot of traders use? if stock is at 105 and SL is 100, what is closing sl…if it breaches 100 and closes near 95-96, its a big loss na? can anyone explain ?
If it breaches the SL and goes down big, you lose big. But, if it hits the SL and reverses higher, the tip seller can claim that his call did not go wrong.
In some markets like US stocks, it might actually improve performance as mean reversion is more dominant in shorter timeframes. Tradeoff ofc is that single trade stops can exceed the level.
I know of a trader who uses a system without stops as any kind of stop would degrade performance.
Any one trade does not matter, but yes there is also need to keep risk under control and you can find ways to make on close stop more acceptable, ex by managing leverage and single trade size.
In India, maybe it wont work as well - but do your own testing and confirm.