Importance of stop loss placement in forex trading.

[lam]

I like that yeh stop placing is a very important factor which most of the traders need to learn and practice very well in Demo account trading. Since there is no fixed way to do it exactly most of the people follow the way. ok }{}{}{}{}{

[naija]

Stop loss can help a trader to fulfill their forex dreams since it prevents the losing of the whole trading capital when analysis goes wrong. Don't forget that if you money management must also work properly, stop loss must be included in it.

[olannoah]

Thanks for your post but in addition here is a very useful article about tailing stop

Two correct ways to use a trailing stop.

A trailing stop is defined as the order for when you are �right� on a particular trade.

A trailing stop does NOT replace a regular stop loss. In fact, you use a trailing-stop in addition with your regular stop-loss. It�s really two separate instructions for the exact same trade.

When you place a trade you always add a stop loss. Then your trading software will automatically close out your trade if the price reaches your desired stop-loss. However, the trailing stop tells the exact same stop-loss to move forward by a certain amount.

Here�s an example: you place a buy order of this currency pair USD/JPY at 98.00 with a stop at 97.00. If we add in a 30 pip trail to that, each time the price moves 30 pips from where we entered the trade, then the stop-loss ALSO Advances by 30 pips.

So if the pair moves from 98.00 to 98.30, then our moves from 97.00 to 97.30. Yes, our stop moved, but you will notice that it doesn�t mean you are profitable on the trade. In fact, you are still 70 pips away from breakeven. Our trail-stop has to �hop� in 30 pips increments three times for us to profit.


Two correct ways to Use a trailing stop.


How do solve this problem so your trail stop guaranties you lock in profits? There are a couple of ways.

Place a trail stop that is wider than the distance between your entry and stop level. Example: Buy USD/JPY at 98.00 with a 50 pip stop at 97.50. Now I also add in a trail stop order for 60 pips. Since my trail stop is wider than the distance of my regular stop, if it moves up, it ensures at least some profit. In this example, once the USD/JPY pair moves from 98.00 where I got in, to 98.60, the trail stop kicks in and �hop� instantly up 60 pips from 97.50 up to 98.10. Therefore, I�m for sure 10 pips in the profit in this example.
Only use a trail stop once your trade has moved enough that you�re at breakeven, even if your stop-loss is triggered. Once you are at breakeven, any tail-stop will lock-in profits. Example: So if I took that same USD/JPY trade and when the pair moved from 98.00 to 99.00, I manually moved my stop loss up to breakeven at 98.00. Then I can add in trail stop of ANY size, then it will surely lock-in my profits.

[meregehese]

Stoploss is important for us to do and we use to reduce the risk of loss levels that possibly, will we be able to. but I myself do not always use stoploss in every time I trade. there are some opportunities that I think do not need to use stoploss, simply by using cut only.

[rima1]

Yes you're very immediately. It's therefore essential for all of us to put an end reduction whenever we industry within foreign exchange having a cease reduction within foreign exchange you are able to simply depart your own purchases presently there. having a cease reduction you are able to prevent dropping a lot in case your evaluation is actually incorrect.

[a_for_apple]

yes laying proper stoploss is one way to avoid too frequent price hits stoploss
for me, I'll put stoploss resistent area above, or below the support area
I think this is the safest way to put

[barnos]

Stop loss is very important for the forex trading, because the beginner's of the trading must feel that forex trading is very easy to earn the profit but when they loose their capital in forex trading then they think that about the forex trading indicator's and tools, so better to use the trading indicator to save the trading capital.

[firesolutionz]

I think Importance of stop loss placement in fores trading. Stop lose is the most difficult for the novice trader, if we can use stoplose trading means it's ready to be a trader but if it does not or can not use it segabai stoplose trader still in doubt. I use pivot points and support resistance method for this.

[nayyara]

stoploss is very important to prevent margin call in short time. we never know where the forex market price will move in next time, don't be over-confidence with your strategy, many trader failed and lost much money because they ignored stoploss in trading..we should stay to minimize risk in forex trading

[gulfam123]

stop loss is great tool to stop your loss and if you use then you reduce your loss ratio many trader use it in their and reduced loss risk so if you are new in trading then you must learn about take profit and stop loss and carry on it in tradng