The stop loss level should be set, and constantly modified on a daily basis, irrespective of the entry level.
For a long position, it should be set below the 3-day support level by like 1 %. The reason is that if the price moves below this line, the (anticipated) uptrend is not proven, then we shall get out and wait for another opportunity.
We can also use day range factor for stoploss setting.
For example, if we anticipate the stock prices in the following daily chart to keep going up in the long-term :
we wait the prices to drop to, but not break, the yellow support line in the following short-term chart . When the prices start to turn up again, we then buy stocks with a stop loss level at the yellow line of the following short-term chart:
We anticipate the prices to move up, if they do so by convincingly above the resistance level (see the top line in the following chart), we are proven right, and then we shall move the stop level to above our entry level, and then add more positions, either for this stock, or another similar stock. Stocks of similar nature (belonging to the same sector) tend to move in tandem.
After the prices of the stock we mentioned above (in the above charts) have move up above the resistance level for some time (like a few days), we shall move the stop-loss level to the new support level of the recent 2-3 days in a similar fashion.
We shall constantly monitor the development of stock indexes, if they have broken their short-term (like 3-5 days) support level, we shall also close all the long positions. The following short-term chart of Nasdaq shows that the uptrend is no-longer held after it breaks the first trend line, and then it is again confirmed after it drops below the horizontal support line. When Nasdaq first breaks the uptrend line, we shall be alert to check out technical stocks. When the 2nd horizontal support line is broken, we shall close all out long positions !
