Stop Loss?? Don't Want To Use It

by John Arnold
(United kingdom)

Why would someone not use Stoploss? What could the rationale be? Stop loss during trading is also an important step to use, to avoid excessive loss. Then why is it you see, many a trader not use it. Let’s try to understand.

There are definite risks of using stop loss especially when placed at the wrong position during trading. But to say "No" to it would be equally rash. There are few points that should be considered while placing the stop loss.

Do not place the same stop loss for all the trades. Understand the market environment. Ask help from the best forex brokers or from seasoned traders and place stop loss on each trade individually. Even when you are gaining, still do not hesitate to use Stop loss, keep your profit objective simple and do not be over ambitious.

Stop loss should never be placed close to the current price, then it is a sure shot of ruining the trade. Similarly the stop loss should not be too far from the current price, it will be just like a mythical protector.

The decision of where to place the stop loss is got through experience and practice and for a newcomer, a most difficult task. This is where the experienced forex brokers come into play, take their guidance, follow the examples provided to learn and improve. Chances are mistakes might happen during the placing of stop loss but as in life, you learn from it and move on being a better trader.

The best forex brokers understand the forex technical trends and then help in placing the stop loss. Based on the type of analysis, decisions can be taken. There are few known tools or methods that can help you to use Stop loss option. Always use 10pip over or below the first parabolic SAR spot as a stop loss position. In cases, where the market has moved far, you could use 10pips over or below the previous day or day before that High and Low values to determine the stop loss positions. While using moving averages, use 10pips above or below the averages. Elliot wave theory can also be used to analyze the market trends and in this case place the stop loss 10pips below the lowest point of the second wave, when you are long on wave three.

These are just few suggestions and options available in understanding the option of Stop Loss. The best forex brokers can be your mentors in helping place stop loss based on your trading style and personality. The importance of a good forex broker comes in such situations.

So the statement "Don’t want to use it" is not just, in case of Stop Loss option. It is an essential part of trading, ever required to protect the trader from the sudden impulses that happen in the market which cannot be controlled when not online all the time. It is an example of the importance of knowing where to place and when to place. Do use Stop Loss option, and be wise about it!

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