Traders will often mention that the stop loss setting is needed. Some people say that we will be able to buy and sell without them and get more, some people say that they have a stop loss strategies, special work.
Today I would like to open up this issue and share my view.
In fact, this order does not in any way, and the space was created and there are stop-loss tactics, that is the opportunity in risk control and profitability without his.
But … Let's go step by step
What is stop-loss orders.
Today I would like to talk about some basics for you. (If you are inexperienced. Of course) to be ready for the discussion of advanced strategies to stop the loss of focus on my next article.
Therefore, it is an order for the purchase. Or sell a currency pair when it comes to the exact price so you don't lose money if the price is still moving in the wrong direction. Such as protecting the security of your funds.
The main advantage of this order is to avoid the requirement of constant market monitoring. You set the order and maintain peace, about the money you are unsure whether your risk is measured with an emotional component is not strong in trade with a stop loss. You will not have a strong desire to make pairs. "Another chance" to move as you want.
The main disadvantage is price fluctuation in a short time, the speech can move your stop loss level. And then they are coming back. For this reason, the size of the SL can be determined by your trading style, giving it wider if you trade medium and long-term contract and them if you are trading daily.
Sounds good, doesn't it, of course, but keep in mind that even with some stop-loss strategy does not guarantee a consistent income. You should still decide the smart trade. Other methods using such orders will help you slow-blow of a user account.
Stop loss orders?
For example, if you anticipate that the EUR/USD will grow and start to level one. You can set your stop loss in. 10 point lower than this level in order to protect itself from losses in the event that the pair will begin to fall.
Of course You can manually check the price and stop trading when you decide. Will cost you too much and a reversal was unlikely to appear. But what if a middle term. You will examine both night and day.
I would like to say from my personal experience that will help very much sometimes. I was in the summer holidays and open mid-range price EURUSD has fallen significantly, and I bought it for a specific period around June 23 if it's so right. How do I open my terminal and saw that my stop loss is hit, and the quote is far from it.
You should be wondering what I am doing and why, haven't noticed a reduction occurs. The answer is simple, can it be a summer my family and I go to the seaside and the Internet connection is weak, the. MT4 mobile although could not work as usual. You know what happens when a good workplace Pachino
The trailing stop order leaves?
Traders often use a trailing stop to minimize their loss in volatile markets. And make the entire process. This means that the function is locked in a percentage (or the fixed amount of points), but in some certain price no loss. Long story short, the price of the currency pair price, SL fixed.
Let's do as we buy EUR/USD from 1.1215 to 1.1275 and set up the order that the SL 25 points it is probably dealing with location 1.1190 this stop loss and trailing stop that will move higher. According to words. If they are at the trailing stop will move 1.1265, your protection order 1.1240.
Hope I explained that for you to understand. Dear readers,
Some people have stopped using trailing stop strategy with a loss, but I'll explain later, we decided to talk only basic things today. Advanced.
The stop loss on what is Forex trading.
Let's take a closer look at the use of the SL in the trade. There are some strict rules how to use the. However, there are certain recommendations that are acceptable.
If you are a day trader. This order is set almost daily price range pair. If the market moves unpredictably, it can protect your account.
If you want to swing trading. This order is set in the deep loss of territory. (Local, high, low) for your position, turn off too quickly. But at a time when the market is moving to far away from the starting point that. It is not possible, it will return to profit is z the real one.
The rules that you should remember is: "If the market goes against your expectations. Do not give it much chance by moving your stop is, it doesn't quite work. Say "Goodbye" at the minimum sum and analysis in the point in the opposite direction, the better]. If you stop to further losses. It will not work as protection orders, which. Lol more
A bonus for you.
Really useful tips for traders:
- If you trade actively is not recommended to use stop losses, all. Just a thought … You see the chart days long, you see what's happening in the market and can stop loss trade manually at any moment. So don't just use caution prior to Sl media releases. The more the area command. There is some news that is going to be a price can move unpredictably.
- Check if your SL is set correctly every time, starting as a trade. Establish a habit of doing twice.
- Keep some of the profit and loss The classic is a 2/3:1 and it is a matter of discipline, and risk management.
- No open positions if your SL is too large (around 100 pips).
- If you are new to the better, always use stop loss (except in situations when you are trading is. scalper)
P.S. I will tell you about stop-loss strategy in my next article. To keep track of the lines.