what is the importance of stop loss? but i read some articles, like the stop loss triggered but the price action is not shown in any charts, and Ans for this query is there are thousand of orders and any charting soft ware can’t capture that price movement, in this case how can we place a stop loss? is that happens to target order ?
Stop Loss is a very basic and important component of trading for risk/money management.it is used to exit a position if you are caught on wrong side of trade and these levels are determined by technical anaysis.
As far as your second question is concered i think they must have been using a trailing stop loss which moves up/down by certain value as set by you if stock moves by certain points in your direction of trade, in that case your initial stop loss is automatically cancelled and it is moved to next level.
just to cut things short, stop loss is just as important in trading ,as breaks are important in a vehicle.It gives you a option, either stop or crash
A properly planned stop loss can become your savior. Use Tech Analysis to identify stop loss values.
Stop loss which is too close to the normal trading range could kill you, as it would hit so many times than your target order.
As far as your first question, I have observed this that a sharp fall in price could occur when very huge market orders are placed and could hit your stop loss, a few seconds within which you will not notice that it is again back to normal values before. When you zoom the chart to max level you could see the pitfall. Thats why stop loss placed too close to the trading range could hit by these sharp falls, which you could not find on chart. This is because chart shows 1 min average data, but the fall occured for few seconds or few ticks.
Coming to your second question, yes this can happen with your target orders also, I have observed this few times, my target gets executed by sharp rise in price for few ticks which eventually settles back to a lower value again. But these occurences are rare. Again, setting target too close to CMP could have such implications.
A stop loss order is an automatic close of a trade that you can set to happen if your currency goes in a direction that would cause you to lose money. For example, if you sold a currency short with the intention of letting its value decrease and buying it back for a profit, you could set a stop loss order if the currency moved upwards by a certain amount. Additionally, if you bought a currency and it began to fall, your stop loss would keep you from losing more than you wanted to by selling the currency automatically.
So, in my opinion learn the trading market before investing in it.