The main advantage of applying stop loss in your trading is that you will protect yourself from giving back all your profits in just one or two weeks. You can also prevent a deep drawdown which will bring you to the margin call level, and even to the liquidation of your account.
Yes, stop loss is not meant to always hit. Stop Loss is a tool that helps you to avoid losing money. It will save you from all those moments when you have an open position, and suddenly it starts moving against you.
Trading withpout stop loss is a very risky idea, especially when we speak about novices in trading activity. In my opinion, if you have just started your trading career, then you're obliged to use stop-loss. It saves you from huge losses and bad emotions. You prepare yourself for losses, shortly after you open a position. It can bring you various emotions, but it won't harm your nerve system as if you would lose all your money. If we speak about professional traders, then they can not use stop-loss, because they know how to weight risks and they're susceptible to high risks. So, anyway, you decide what you want to get from trading activity, experience and money, or just drive and emotions.
Traders do have a thought that profits get hampered when they put a 'stop loss', but actually that’s not the case. Stop loss helps in limiting your losses, and if you find that the market is going in your favor, you can modify your 'Stop loss' at any time. But remember greed can make you experience big losses, so it’s better to earn less at a time instead of losing everything in one time.
If you are new to forex trading and want to play safe, the first step is to control your greed. Any currency pair you choose to trade in, it is a must to put a stop-loss value depending on your entry price. Thus it reduces the potential risk on your investment by lowering the chances of loss to a minimum level.
Stop losses are essential. They give you clarity on whether your strategy is working and also stop blow outs. Every single trader will be wrong at some point and you want to be wrong small not big. No stop loss could wipe out days or weeks worth of profit
I don't think trading without a stop loss has got anything to do with skill. It's kamikaze risk management and wouldn't fly on any trading floor or in any fund so why is it acceptable for your own personal account? As the poster above me rightly says, this is a game of capital preservation first and foremost. We all lose trades and it's about ensuring those losses don't wipe out your gains. Yes you can hedge but how often does that go well?
If you can't spot the liquidity then you are the liquidity.
blancheklein posted: If you are new to forex trading and want to play safe, the first step is to control your greed. Any currency pair you choose to trade in, it is a must to put a stop-loss value depending on your entry price. Thus it reduces the potential risk on your investment by lowering the chances of loss to a minimum level.
Yes. Stop loss is very useful for the new traders.
Without a stop-loss, there is no way to protect your trading account. You will lose your money sooner or later if you don't use stop loss while trading. It is a necessary tool for a successful forex trading career.
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