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Basic Things About the Stop Loss Order

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Avinash Offline referral

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Joined: Oct 2017
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#1
Junior Member
One of the most difficult things in Forex Trading is stop loss management. A stop loss order is an order that stops you out of the market with the intention of minimizing your losses when the Forex market is moving against your position.

There is no golden rule to where an SL (stop loss) order should be set, it all depends on your trading strategy.

Stop loss orders

If your trading strategy is based more on day-trading, you could set your stop loss just below or above the daily high or lows. Therefore if the market moves out of the trend that you are trading and moves a lot in the opposite direction, your account is protected because your trade/trades are closed.

If your trading system includes medium-term trading (swing trading), you could set your SL (stop loss) at double or triple the daily range.

Don’t forget, the purpose of the Stop Loss is to close a trade when the Forex market starts moving a lot against your trades. It can be difficult to accept that you have made the wrong decision, but the market is as unpredictable as the weather. Sometimes you look at things waiting for the obvious, just to see that the market is reacting unexpectedly. Setting a stop loss when you open a trade can help you draw a protection line.

Regardless of the strategy that you choose for your stop loss order, remember to NOT change it further away to prevent exiting a trade. There are exceptions to any rule, but in general, if the stop-loss orders are executed for good trades, it means that you are not setting them correctly from the beginning. It is better to change the stop-loss strategy. Modifying the stop loss orders to prevent them from being executed, you are going against the protecting purpose of them.

When you create your stop loss order strategy, remember to adjust it to your trading account and trading strategy. The purpose is to limit the losses when you are wrong. If the losses continue to be expensive or your orders are executed constantly, you need to rethink your trading system/trading strategy / stop loss strategy.
HamzaAfzal Offline referral

Posts: 128
Joined: Oct 2017
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#2
Member
There are certain things which you need to keep in mind that to stop-loss order as you can do the following things:
1: Always do secure investment
2: Always chose reliable broker
3: Always check on ups and downs of stock market





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