There are countless articles and videos on the internet that teach how to handle losing trades in one fashion or another. It really is an art and may people try to boil it down to some metric that may be useful in one scenario, but not in others.
Like it or not, as a trader you will find yourself in a situation where a trade has moved against you and you ask yourself how you got into this mess. It's just a part of trading that you must go through to have respect for how quickly things can get out of control.
Rather than teach a specific stop loss trick, or use a chart to tell you when to get out, let's take a more personal look at how you might be able to spot trouble before it strikes. Ignore the flashy indicators for a second and let's start at the moment you enter a trade.
When you start a new trade why was it? No matter what you use to enter a trade, that led you to an assumption. Let's say you use technical analysis and you notice that a stock is dropping down to support. It is a strong support area and you are thinking it will stop dropping there and bounce. This is a fair assumption and a valid reason to enter to so you calculate your risk and enter the trade.
If it bounces then you make money band all is good, but what it, as time passes you notice that it is stuck and it is not bouncing. Instead of this magical bounce that makes you rich, the stock is just sitting. You see, every trade has not only an assumption, but also a time clock. The more you trade the more your time clock gets refined and you know that something should have happened. This is one area you can focus in on to help reduce your losses. If a stock is expected to bounce for you and instead it does nothing, that may be your first hint to exit.
The same can be said for stocks that move in your favor but only by a little bit. Your experience will lead you to believe that time is running out and maybe you should consider an exit plan. This is especially helpful for day traders as things can quickly get out of control there. Pay attention to your internal time clock and see what you can learn from your own instincts.
