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- Fixed Stop Loss
Description: With a fixed stop-loss set at a given price and does not shift about the change in price. With this, a trader simply sets it as a ratio of a given percentage in or pip amount from the trade entry.
Advantages: It is very straightforward and pretty easy to put into execution.
Disadvantages: It can make a stop-loss exit earlier than needed in the case of unpredictable markets. - Trailing Stop-Loss
Description: This stops the price when the trader is in profit on that trade, and “trails” it by a determined distance. When the trade reverses, the stop-loss will stay at the highest point it touched while the trade gets closed out if the price moves further down from that point.
Advantages: The time-based stop-loss locks gains as the trade goes in its favor.
Disadvantages: The stop-loss might end up getting triggered earlier on in choppy markets. - Time-Based Stop-Loss
Description: This stop-loss is time-based, not price-based. A trader may close a trade if it does not hit a target or stop level within a specified time.
Advantages: Suitable for short-term or intraday trading systems.
Disadvantages: Not a protection against price volatility, only time-based. - Volatility-Based Stop-Loss
Description: Technical stops are dependent on the asset’s technical conditions. For example, using the Average True Range indicator, a trader may set a stop-loss level depending on current market volatility.
Pros: The trader can adjust his or her stop according to the given market condition; there is a smaller possibility of being stopped when the markets are highly volatile.
Cons: The stop is calculated more complicated and needs adjustment from time to time. - Technical Stop-Loss
Description: This is based on technical analysis such as support and resistance levels, trendlines, moving averages, or other technical indicators.
Pros: The approach is aligned with major price levels, thus better for technical trading.
Cons: It may need a revision as the technical aspect of the outlook changes. - Equity Stop-Loss
Description: An equity stop-loss refers to closing a trade when a certain percentage of the account balance is lost.
Advantages: Losses do not pass a percentage of the account.
Disadvantages: It doesn’t care about price action, wherein a stop can sometimes be triggered due to brief price movements. - Psychological Stop-Loss
A non-executed stop-loss is a point at which a trader arbitrarily sets a price level; when the price reaches it, the trader closes manually.
Advantages: Flexibility and adaptability in choosing decisions.
Cons: It depends on discipline, which is hard under emotional or stressful trading conditions. - Guaranteed Stop-Loss
Definition: It is a stop-loss that can guarantee the trade to close at the specified level irrespective of the market gaps or high volatility.
Pros: More protection in major news events and in highly volatile markets
Cons: It has often been associated with a premium fee from the broker.
All of these forms of stop-loss are useful depending on your trading strategy, time frame, and personal risk tolerance.