Dear Trader,

Stop loss values have multiple meanings and affects in trading. People who are holding a stock for long or a day trader  and want to make maximum profit with exit strategy can have the tight stop loss. The moment Stop loss hit they are out.

There is always risk of keeping tight stop loss, if market opens lower than SL values, then there will be a whipsaw.

Some traders follow 2-3% or point values rule means if price fall more than that they are out of the market. Threy are traders who keep SL values at certain days/weeks/months MA, which is considered a safer practice for long term investors.

Price below stop loss may not call off the bull cycle. It can correct soon or act according to MA values. There are multiple other indicators/technical which have to be turned negative/positive to call Bull/Bear cycle off.

Other benefit of hitting stop Loss or price correction,  People who are waiting to enter into a particular stock and waiting for price correction, they can take this opportunity to enter as price has dropped to MA 15/20. But again there is always possibility that It was not just a price correction basically downward price movement  have started and more to happen which can offer much cheaper price for a stock.

People who are Long investors, may not keep DMA SL instead they keep WMA.