Stop Loss Order in Forex – As we enter the beginning of November 2018 – Trading on Fx is a range of activities. Each forex trader should be able to calculate the profit, but to learn to stop on time, close the order and finish the trading. The minute of delay often can cause the serious losses.
It’s very important to be near the computer to control the process of trading forex. Sometimes it’s not possible to do. In such cases it’s better to use the pending order, such as stop loss or take profit order – the situation on market order when you just can’t manage to close the order. In this situation, FX trading without profitable trading is hard, but also loose your money on the account. But usually you are able to avoid such losses.
What is Stop Loss?
The limiting of the losses. In the most of cases, the limit of Stop Loss is not more than 9% from the size of the margin per order. If the company is oriented on the newbies forex trading strategies, then the limit may be up to 11-34%. Thus, the main task for this order is to reduce the losses of the trader – Stop Loss Order in Forex.
Despite all advantages of the Stop Loss. The reason of uncertainty is the dispute regarding the possible stop losses. Some specialist are sure that all the deposit of the forex signals trader can be absorbed by the Stop Loss. Other think that without Stop Loss, trend is usually not unfolding and the price is “killing” the deposit.
You can work with Stop Loss, as well as without it, Stop Loss placing is justified. We can say, that it’s very popular among the experienced signal traders. The success of the deal in most of cases depends on the size of the trading instrument. You can establish the limit in 10 points and to lose all deposit, or its part. Or you can make the order on the level of 180-400 points.
Trading Psychology in Forex comes from your own ability not to let your emotions get involved when trading – Stop Loss Order in Forex.
Imagine the ordinary situation: trader has about 3000 USD on the account. While the volume of order is 2 lot, Stop Loss is set on 40 points and Take Profit is set on 130 points, it is possible to tell with high probability about loosing bigger part of deposit. FX platform MetaTrader 4
How to Use Stop Loss
- Stop Loss has to be on the level lower than the opened position, if it is buy order. The goal is the same – to minimize losses and increase saving the deposit in case of the sharp reducing of the quotations-Stop Loss Order in Forex
- Pending trade orders are what you should use if you want to initiate trades based on specific market prices. If you are using forex signals, looking to implement a trading strategy, this is the way to go.
- Stop Loss has to exceed the level of the opened order, if sell order is opened. In this case, the losses will be minimal, if the prices increase. There are some traders, who are trying to move the Stop Loss, on the expectation of the price turning. It’s not the best idea, because in 50% of cases it causes higher losses.
- Using of the special case of the Stop Loss – Trailing Stop. This function helps to move the borders of the Stop Loss after the market movements. The border automatically shifts, when the market passes more than 13 points in the desired direction. Wherein, if the Trailing Stop works at least once, trader will get his profit. And in the case of the price reversal, trader won’t lose his profit and it will be fixed on the last Trailing Stop level – Stop Loss Order in Forex.
- Stop Loss may not be used with the scalping strategy. Since in this case, the time, spent on placing, may influence on the profit in the negative way.
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