This is the most common problem among traders. How to set stop loss to protect position but not to be stopped out too soon? The good news is that setting stop losses with Fibonacci trading tools is easier. In this article you can read about basics of setting stop losses and some more advanced tips.
1. Research about Stop-loss orders.
Once a trade is showing a moderate profit, a trader commonly adjusts the stop-loss order, moving it to a position where it protects part of the trader's profits in the trade. Continuing with the previous example, assume that after the trader buys EUR/USD at 1.1500, the price subsequently goes up to 1.1600. At that point, the trader may move their stop-loss order up to 1.1540, thus protecting almost half of their existing profit in the event the market turns down. So, first research about stop loss orders and then start trading. Because, stop loss order is really important in trading. if you want to protect your money.
2. Limit Order
A limit order is placed when you are only willing to enter a new position or to exit a current position at a specific price or better. The order will only be filled if the market trades at that price or better. A limit-buy order is an instruction to buy the currency pair at the market price once the market reaches your specified price or lower; that price must be lower than the current market price. A limit-sell order is an instruction to sell the currency pair at the market price once the market reaches your specified price or higher, that price must be higher than the current market price.
3. Setting Static Stops
Traders can set forex stops at a static price with the anticipation of allocating the stop-loss, and not moving or changing the stop until the trade either hits the stop or limit price. The ease of this stop mechanism is its simplicity, and the ability for traders to ensure that they are looking for a minimum one-to-one risk-to-reward ratio.
4. Manual Trailing Stops
For traders that want the upmost control, forex stops can be moved manually by the trader as the position moves in their favor.
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