The Importance of stop loss in forex trading.

[Snicket]

You have to be very careful while choosing a suitable stop loss. If it’s not chosen properly, a small market fluctuation can trigger it. But since it can save you from sitting in front of your system the whole day, it’s a good risk management option to make use of.

 

[Riffraff]

Although it is true that stop loss prevents traders from losing a big amount, using a stop loss has some cons. The market is constantly rising and falling, and sometimes rises high after falling for a short-time. In that case, traders lose money. However, there are strategies like hedging that traders use to benefit from such situations.

 

[Hogwash]

@Riffraff Yea, stop loss also minimises slippage while using leverage and prevents the trader from unrealized losses.

 

[GlenWest]

Benefits of 'stop loss'

1) They're triggered automatically

2) They can prevent big losses

3) They can help traders to become disciplined.

 

[WalletInvestor]

Some people prefer not to use stop loss and it is true that unfortunately some market fluctuations can trigger it unnecessarily, but in general I think it is a useful tool, along with take profit orders.

 

[timothydanie]

I believe, even if the trader is 100% sure about his trade, he should still use stop loss or trailing stop loss. It is always good to be on the safe side.

 

[Zooscopy]

When you have set a stop loss level, you won’t be required to keep an eye on the currency to see how it has been performing. If the stop loss order is placed properly, it can limit your losses to a great extent. While it may get triggered even after a small price fluctuation, it’s better than not using it at all and letting price fluctuations destroy your trades.

 

[Linsang]

Stop loss should be practised by all traders as it aids in automating the selling of the assets when the price falls beyond the level you are ready to lose, thus, preventing large losses. It is triggered when the asset touches a predetermined price and maintains the risk rewards while trading.

 

[Isonomy]

Stop loss is a really important part of trading. As a newbie, traders should calculate their risk-reward ratio and utilise stop loss to avoid losing a lot of their money through trading. It is often overlooked by new traders and hence why so many traders end up losing half of their money.

 

[Hippomobile]

It keeps me from glueing my eyes to the screen. I analyse the market and calculate stop loss and take profit in accordance with the market. I might not be making huge profits. But I think it’s better than making huge losses.

 

[Whimsical]

When I have set stop loss and take profit, I am stress-free that I will never lose more than I can afford to. I also don’t have to keep checking the direction of my trades all the time.

 

[Profesor Pips]

How you want to calculate max dd if you don't know how much lose single strategy? Especially, when you are a new trader.

 

[Polakandil]

Stop-loss is one feature to limit the max risk in single trades, this is included as one way to manage the risk in trading, another way to manage the risk like as hedging, using trailing stop or hedging use pair correlation like basket trading strategy.

 

[Neology]

When a trader places stop loss, they reduce the chances of risk that may occur during market changes. By doing this, they save their already accumulated profit and don’t have to start from scratch. Stop loss is a great risk management strategy and works well. All newbies must use stop losses.

 

[schmutz]

Stop-loss is a crucial idea in trading because it limits your losses if you don't keep an eye on the trade.

 

[Theresa Duron]

This explanation is probably the best I’ve read so far about stop loss. Stop loss is a very crucial tool in forex owing to its high volatility. The forex market is very risky and it is important for all the traders to use a strategy with proper risk management and stop loss else you’ll suffer losses.

 

[Arithmogram]

I agree with all the traders who believe that stop loss helps them by limiting the chance of losses. But if the market shows a sudden fluctuation and then gets back to its normal track, you can lose a major deal. I have always been confused about using or not using stop loss order.

 

[Spartan]

Stop-loss is important because it protects you from incurring heavy losses on trades gone wrong. You can also use trailing stop-loss.

 

[Curtate]

No matter how much we discuss stop losses, we can’t stress enough! It is a crucial component, and without it ,winning in the forex market is not possible. Forex market is infamous for its drastic changes, A stop loss ensures that you don't lose your trading account to such unpredictable moves.

 

[Paulsy]

It’s best to place your stop-loss as soon as you enter the trade. One effective way is to set them past the support level. If you do so, you will likely exit where the majority of your peers do. You can increase your stop-loss to a higher level if more favorable conditions appear since entering the market, improving your chances of profiting. Trailing stop orders are also a better way to accomplish this. Stop-loss orders of this kind adjust themselves if the market price rises but remain unchanged if the market price falls.

You can also use stop-losses if the value of your currency pair is above your reward and you hope to make a greater gain. Wait for the price to pass it and set your stop-loss order at that price. It’s called a protective stop. This way, you still achieve your exit point even if the worst-case scenario occurs. Stop-loss orders can be extremely effective if you use them creatively.

The feeling of entering and exiting the market is an extremely important element for many beginners, and testing your strategies without it is not really valid. Instead, we suggest you test your strategy in a real environment, but with a small amount of money, like a Cent account.