Stoplosses and False Breakouts ? What strategy to take.

Its been quite a while since i have written a post due to a lot of new concerns.

This is an educational post and have not personal exposure or financial interest in the stock being discussed.

This is the chart of Apollo Tyres

-> The stock broke into new a new high from a range. This strategy has a good hit rate in trending markets.

-> Although volumes did not increase as much. This could be a criteria but at times we just take a pre-emptive bet.

-> After a move above 235-240 the stock has collapsed to 180.

-> A 20 day exp moving average stoploss would have been triggered at 225. There can be various ways to put a stoploss ( i have just taken 20 day as example)

Consider if you use leverage and not keep a stop loss. A 30 % drop with 3x leverage would imply 90% capital erosion. ( This is the reason leverage can be a killer )

This is why we need to keep stoplosses or a positiion sizing which takes care of such a drop . ( At times one can make a mistake of holding out or stops and so on )

I would prefer a stoploss as a trader and be a little diversified as an investor to not get badly hit by 30-40% drops.

Everyone has a strategy. Would love to hear more on how to counter these trades. ( not looking at hindsight reasons of how it was not a breakout and etc )