There are always FX traders who don't want to close a losing trade because they think that the market will move in their favour. But the problem is, the markets are not generally known for moving in the favour of individual traders, so trading Forex with no stop-loss is literally like putting emotions over logic. But keep in mind that stop-loss orders do not guarantee you profit – nor will they make up for a lack of trading discipline. You need to be confident in your trading strategy and stick to your action plan.
Stop-loss is useful tool for almost all currency trading strategies as it can be attached to both long and short trade positions. No matter how closely one might try to monitor the market, it is impossible to accurately predict Forex market movements. Every day comes with changes that have significant impact on the market, such as global politics, central banks’ actions, and economic events. Many global factors can cause major shifts in the trend of currencies at the snap of a finger. As such, even the savviest trader can find themselves on the adverse side of a market move. When severe market dips happen, stop loss trading can help to close out your position and prevent excessive losses.
Informed Forex traders always include a stop-loss order when placing trades. In fact, you should not, or else you risk blowing your account up with losses when the price trend goes the unexpected way.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors.
Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.
Past performance is not indicative of future results.