The Probability of a Stop Loss Being Triggered

Sometimes there are no obvious regions of price support that can be used as a reference for placing a stop loss. However, by using a volatility-based stop loss, you can set your stop so that it is statistically improbable that it will be triggered by a stock’s normal fluctuation within a given holding period. This can give a stock enough “wiggle room” to continue its climb without a high risk of a premature sale because of a non-significant lurch of the stock.