Stop Loss

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Thread: Stop Loss

  1. #1
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    Default Stop Loss

    Stop Loss
    Stop Loss

    This is the point where you admit you were wrong. No one can pick winning stocks 100% of the time. Accept this fact. You can only play the odds.
    Let's say we buy a stock at $20 with the plan that it will go up to $24. Now we have to decide what to do if the stock does not go up, but suddenly starts to fall. Let's decide that if the stock moves below $19, we will accept that we were wrong about the direction of the stock, sell the position immediately, and take a small loss. By taking small losses, we preserve our trading capital, which allows us to trade again tomorrow.
    Before we even get into a position, we have to measure our risk-reward ratio. In the above example, if we were correct about our stock pick, we would have made 4 points. If we were wrong in our stock pick, we would take a loss of 1 point. That is a risk-reward of 4:1. Let's say we were only correct about our stock picks 50% of the time and we make four trades. Two were winners (2 x 4 points) equaling 8 points. Two trades were losers (2 x 1) totaling 2 points. We now have a gain of 6 points by only selecting winning stocks 50% of the time. Assuming we were the worst stock pickers in the world and were only correct 25% of the time, we would still have a gain of 1 point.
    It is important to keep your risk-reward ratio 4:1. If you can only find a risk-reward ratio of 2:1, leave it alone, sit on your hands, and do nothing. If the market is behaving in a way that you can only find risk-reward ratios of 2:1, you probably have no idea as to which way the market is going to move. The market spends most of its time moving sideways. I have seen many traders lose most of their capital by making themselves trade when they should have stayed on the sidelines.
    I still remember the first time I stared at the screen the entire trading day from 9:30 a.m. until 4:00 p.m. without making a single trade. I was thinking to myself, "I know the market is normally irrational, but today I have absolutely no idea what is going on." I made some paper trades in my head, and I was glad I had left it that. All the trades I made in my head were losers. Even though I did not make any trades that day, I felt like a winner. It was a great feeling to know when to sit it out. I was right to stay on the sidelines. You have to have the discipline to stay on the sidelines when you do not feel comfortable. Getting into low risk-reward positions because you want to be in the game is wrong. It shows a lack of discipline and the punishment is losing capital.

  2. #2
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    stop loss is not possible fully in forex trading. We can use some tools to stop loss on pips what we set before here our trade automatically closed if we are not getting profit.Trader need to learn different ways to stop his loss on lower pips .

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    Quote Originally Posted by Master Forex IB View Post
    stop loss is not possible fully in forex trading. We can use some tools to stop loss on pips what we set before here our trade automatically closed if we are not getting profit.Trader need to learn different ways to stop his loss on lower pips .
    I am agree with you... and i can say that you can protect your loss if you can be not too greedy with profit....

  4. #4
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    Every trade have gain and loss , never you can not stop loss from any trade , if you can be not too greedy with profit....

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    yes keep it in mind with every trade that here is a chnce of loss than profit .So you should manage your trades acordingly to manage your risks not to gain profits. When you will be good in minimizing loss profit will be sure . So stop losses as much it is possible.

  6. #6
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    There are somу disadvantages of using stop loss, but trading without SL becomes gambling.

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    I tried trade without setting SL and when market went reverse, my account get exploded so I always set SL for my trades

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    That’s definitely the right way to go mate, I also prefer using SL after my trades are in profits, the reason is fairly simple and that’s to save myself from any unexpected events or danger. I work with OctaFX broker; it’s a true ECN company with having ECN account, so I can use SL without fear given there is no manipulation or such action happening, it always keep me in save zone and allows me to perform at my best!

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    If somebody wants to invest money on the forex market than he or her needs to join in brokers. Without brokers this is impossible to invest. Good brokers make the rights way giving security to the reserve, giving leverage, giving the analyze data to the trader that he can take decisions. There are good and bad brokers. Traders have to choose the right one. Itís not so easy but if you analyze some of them then It will be easy for you. I choose ForexChief as my broker. Because they are very good with man power as well as technology. They are very trusted and reliable. They have a strong reputation the market. so I think this the best for me.

  10. #10
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    in ro ham eslah kon:
    Stop loss is very important. Because there is no trader who want to loss his capital much. Stop loss limits the loss. Every traders want to secure their capital. By using of stop loss a trader can trade in the forex market without any tension. I am also a trader. I am currently trading with TP Global FX. I always use stop loss while I am trading in the market.

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