I can't get this idea out of my head - to have a Stop loss at -0.1% or whatever the minimum allowed from entry have a program that will keep monitoring for stop loss triggered, and then for a price breakout once again beyond that level, and immediately rebuy the stock with a stop loss, and keep repeating. There is the risk that the price at which the stop loss gets filled is lower than I like but I imagine it is better to lose Rs. 1000 just to attempt to enter a successful trade than lose Rs. 10000 by just hoping the trade pans out to profits. What do you think?
The idea might work, but in a practical sense you need to allow for some movement space post buying. 0.1% would not be a sensible SL because bare minimum volatility is inevitable for any stock even though the price would subsequently be moving in your favor.
So, even a small SL must not practically be below 0.25% and that too provided that your entry criteria is very precise and has an accuracy of over 50% with Reward:Risk >2
The idea is that, your SL must not hit a large number of times due to extremely tight SL, otherwise you will end up paying a significant amount of Brokerage & Taxes compared to the amount of profit that you can make even if you eventually get the trade right after 10-15 re-entries.
Thanks for the inputs. I will paper trade and see with SL at 0.1%, 0.25%, etc below the entry price. About the price level oscillated over several times, I have a feeling that option prices may oscillate lesser compared to stocks due to their lower liquidity, so I will try it out with options as well, keeping in mind that options trade eat Rs.20 each time in brokerge commissions unlike CNC that has 0 commissions.
So, even a small SL must not practically be below 0.25% and that too provided that your entry criteria is very precise and has an accuracy of over 50% with Reward:Risk >2
The idea is that, your SL must not hit a large number of times due to extremely tight SL, otherwise you will end up paying a significant amount of Brokerage & Taxes compared to the amount of profit that you can make even if you eventually get the trade right after 10-15 re-entries.