Stop Loss Hit
- Rohit Musale, CFA
- Jan 13
- 2 min read
My stop loss would have been hit in less than a week if I had bought this stock.
This is the daily timeframe chart of Pricol.
The blue shaded area is the 5% buy zone.
The red shaded area is the 5% to 8% stop loss zone from the buy point.
The stock enters the buying range on 2 Jan 2026.
And enters the stop loss range on 9 Jan 2026.
Did I buy this stock ?
No.
Why ?
Because, it does not fit my comparative criteria.
In comparative analysis, I check 5 factors:
- RS Rating
- Accumulation / Distribution Rating
- Industry Group Rank
- Industry Group Rank Improvement
- Industry Leadership
Within, industry leadership, I look for top 5 stocks in the industry group as per their market caps.
Pricol belongs to the industry group: Auto-Manufacturers.
It ranks 14 from the top.
No way is this company a market leader in its space.
When market conditions are weak, I prefer to stick to leaders in an industry group.
So, rejecting Pricol was a no-brainer.
I did not even bother doing any:
- Technical
- Fundamental
- Liquidity
- Market
analysis of the stock.
This is one way of saving time while filtering stocks.
The skill of rejecting stocks is a far more important skill than the skill of selecting stocks.
Just because MarketSmith draws a beautiful Cup with Handle Base 2 pattern with colorful buying, selling and SL zones on the chart, does not mean you will make money on the stock.
You have to use your judgement.
You have to do your own due diligence.
I can reject stocks in a fraction of a second because I have absolute clarity on my criteria.
With this method, I am able to successfully avoid unnecessary losses.
It is far better to book a loss on a strong stock than book a loss on a weak stock.
Stick to leading stocks from leading groups.
Especially in weak market conditions.
Regards,
Rohit Musale, CFA
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