Sel once stock touches resistance or support levels

[sharanbr]

Let us say, I have stock that is currently priced at 500 and purchased at the same price.
I hope to sell if it touches 650 to make a profit
I want to sell if it goes low to 400 to limit the loss

How should I place the order in the in this case.
I can place a sell order with a price target of 650 to sell if the price reaches the target.
However, how do I place the order to sell if the price goes low to 400?
If this a single order or I have to place multiple orders?

Thanks for the clarifications ...

 

[hatemypips]

Let us say, I have stock that is currently priced at 500 and purchased at the same price.
I hope to sell if it touches 650 to make a profit
I want to sell if it goes low to 400 to limit the loss

How should I place the order in the in this case.
I can place a sell order with a price target of 650 to sell if the price reaches the target.
However, how do I place the order to sell if the price goes low to 400?
If this a single order or I have to place multiple orders?

Thanks for the clarifications ...

I guess you wanted to say that you have to buy stock with a target of 650 or sell it if you expected its price to fall to 400. Or you can buy call option with strike price at 500 or put option with same strike price

 

[J_C_Anderson]

If you have an average position price 500, target price 650 and stop loss level 400, you would either earn 150 or lose 100, so the actual risk-reward ratio would be 1:1.5. It would be extremely difficult to become profitable with such risk-reward ratio, as it has to be at least 1:3. In this exaple you would need either to move your stop to 450 or set your targer at 800 to keep the proper risk-reward ratio.
Another important point is that if it is a swing/mid-term trade that lasts for several days, it would be better to avoid fix stop orders because you could be stopped out bu sudden selloff that may take place at the begining of the trading session for many reasions. For example, if the market opens gapping lower due to some fundamentals issues and your stock has high beta value, it would probably move down after the open. Of course, in case if everything okay with your particular stock it would bounce back in a few minutes (as usual - during the first half an hour of the trading session), but those who had stop orders placed would be stopped out with very unfavorable price.

So, the advice could be the following:
1. Check the ways to improve risk-reward ration, this is extremely important
2. Use "mental stops" when you just keep in mind the price you are going to close the position, both for stop loss and take profit