in Forex Exchange/Forex Trading or in Forex Market there are many Features with that you can trade in a smart way and try not get the loss. stop loss is the one of that feature that can give you a lot of opportunities. in forex trading, you should know about stop-loss. without stop lose you may lose your all trading account with your Capital. now you may have a question in your mind that what is stop-loss basically. for example, you have analyzed the whole forex market and you start a trade with that market. so now you can’t set in front of PC/Laptop all day. you have predicted that market will go up/down till that pick. after some hours your predict went wrong at that time you don’t know that market has gone against your predict. at that time you if you set a stop-loss then you will lose a limit of your money or if you didn’t set any stop-loss then it can finish all your account balance till the account get empty. so if we see with Eye of a Forex trader stop-loss is a great feature of all the time in forex history. we found that What is Stop-loss in Forex Trading and How to Set it? in this article, we will talk about stop-loss without wasting time let’s begin
1. What is Stop-Lose Order(SL) Basically in Forex?
A stop-loss order is an order placed with a broker to sell a security when it reaches a certain price. Stop loss orders are designed to limit an investor’s loss on a position in a security. Although most investors associate a stop-loss order with a long position, it can also protect a short position, in which case the security gets bought if it trades above a defined price. you can say that stop-loss can secure your Trade.
2. Example of Stop-Lose Order(SL)
If you own shares of ABC Inc., which is currently trading at $50, and want to hedge against a significant decline, you could enter a stop-loss order to sell your ABC holdings at $48. This type of stop-loss order is also called a sell-stop order. If ABC trades below $48, your stop-loss order is triggered and converts into a market order to sell ABC at the next available price. If the next price if $47.90, your ABC shares sell at $47.90. this is an Example that how you can set a Stop-loss in a forex trade(forex exchange).
3. Where to use stop loss and stop loss(SL) management
New traders should allow the market to hit their original stop loss or target–“ set it and forget it.” Actively managing trades complicates the trading process and can induce a lot of emotion which new traders may not have the skill set to deal with. That said, some basic stop loss management–such as reducing risk once a trade is closing in on the profit target–is acceptable. Risk should never be expanded; move stop loss orders to reduce risk, but never to increase risk.
few simple guidelines to get out of trades early (not let the price hit my stop loss or target)
- If day trading, I get out of a trade about 2 minutes before a major economic news announcement.
- If swing trading, I get out of a trade if the current price is close to my stop loss or target and a major economic news announcement is coming out soon.
- Stop loss is contracted to near breakeven once a trade is 50% of the way to the target.
- Stop loss is further contracted, guaranteeing a profit, once the price moves 75% of the way to the target.
- If the price moves very close to the target but doesn’t fill the target, manually get out immediately.
Hope this Article Help to Know More About What is Stop-loss in Forex Trading/Forex Exchange and Stop-loss Managment
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