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Trade
Stop Loss
Stop loss (Stop Loss) on the Forex market performs the role of the limiter as a brake in trains. Stop loss is an order that generally limits losses in trade, but not mandatory. Its application most experienced traders consider it necessary, and speculators who do not use Stop Loss (S/L), are often considered not competent in trading.
Any courses for beginners speculators mandatory talk about what is this restraining order, as well as demonstrate ways it can be used. In his most popular role, "stop" is the stop loss on one specific deal offered on a price which would be incorrect opening of this position. Thus, upon reaching the order price people have to understand that this transaction was incorrect, and it makes no sense to accompany her.
Why the need for a Stop Loss?
This order can vary for various reasons. For example, a person cannot be 100% sure of the reliability of the equipment that is used during work. Can't be sure the speculator and as a connection to the Internet, uninterrupted electricity on the workplace. Therefore, in order to protect themselves from a situation when it is impossible to coordinate the trading process, stop loss as a safety net.
Another reason can be considered the psychological feature of a person. Determine the price level at which it will be necessary to close the loss, a trader at the last moment to spare his capital, hoping for a market reversal and to close the position. In the end, the loss will be much greater than was given the trading strategy of a speculator in a single operation.
The use of Stop Loss
The easiest installation option "stop" is from the opening price of the transaction at a certain distance in points. For example, you can place the order with the appearance of each new position at a distance of 30 points from the open price. This option can be considered somewhat ossified, as it turns out committing the same action in different market situations, which is not very good to work with.
The second popular option is the installation of Stop Loss is important from the point of view of the trader, price level. In this case the whole calculation is based on the fact that if the price can break level is selected, then most likely, it will continue its movement in the direction of the break. Thus, it makes no sense to continue to push the limiter.
If a trading system the speculator is built on the indicators, in this case, not infrequently, all orders are placed according to the testimony of most of these indicators. In such cases, as a rule, the transaction and issuing orders is an action exceptionally prone signals system. People developing a system which during operation emits signals indicating the prices that have to be used.
Not only to limit losses
Stop loss is used by traders not only to limit losses but to "urging" the prices in the profitable direction. For instance, breakeven nothing like a maneuver to protect the Deposit against possible losses on the deal. On the one hand "stop" in this case acts as a limiter, on the other hand, it is not intended to limit it damage.
It is worth mentioning about trading stop that moves to be at the market price if the latter goes in the direction of an open transaction. The profit increases and trailing moves farther from the point of opening the position. As a result, when the market will finally unfold against the speculator, he will have to wait near the limiter, which will close the deal with a profit.
Similarly, you can rearrange the Stop Loss on a different principle that a person considers optimal. For example, you can move the order on fractals, first using him is still value in the unprofitable area, and then in the profitable. Most importantly, the understanding of those opportunities that gives us this restraining order. His use of mo burns to be quite diverse than can be used in different market situations.
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| Category: Forex | Added by: (05.11.2017)
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| Views: 421
| Rating: 0.0/0 |
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