In the foreign exchange market, if you do not learn to stop losses, traders may fall into financial and emotional traps and are unable to rebound. If the trend of the foreign exchange market is not friendly to investors' transactions or when you see your own losses gradually accumulate, it may be easier to wait for the price to rebound at this time. Next, I will introduce why stop loss is more important than other operations in trading.

Whenever they hear the phrase "cut losses and let profits lead", they will receive a sum of money. For many traders, they may make more money when they hear this phrase than they earn from trading. More money. Although it sounds reasonable, what we have to do is not only remember this sentence, but apply it to transactions. However, many foreign exchange traders believe that setting a stop loss point ends the risk of trading. But if they adjust the stop loss to a point where they can lose more, they are already dominated by emotions. The stop loss point should be the focus of trading activation, and a good stop loss point will help traders avoid losing too much in the transaction.

There are many novice traders who should take 1-2% of the risk in the transaction, but take 5-10% of the risk. Therefore, the novices’ experience puts them too much emotional burden on the transaction; if these losses are emotionalized, then they are not suitable for foreign exchange transactions. The above sentence tells us that if we cannot stop trading when we lose money, we will emotionalize the loss and make subsequent transactions continue to lose.

There are many ways to stop loss. Traders should not be too entangled in how to enter the market at the perfect time, nor should they be too entangled in how to stop losses at the perfect time. In the world of foreign exchange traders, there is a common joke: the perfect stop loss may be only one point from the high or low of the callback of the transaction. Of course, if this is the case, it may be the ratio of luck to technology. Bigger. But you also need to understand what a stop loss is and what a good foreign exchange trader should pay attention to.

Professional foreign exchange traders generally pay attention to the key technical levels that will invalidate their trading strategies. This means that if the transaction is based on the 20-day moving average or the Ichimoku equilibrium chart, then when the instruction to buy has issued a signal to sell, the transaction should be exited in time. In addition, the size of the position should be accurately calculated, so that when the trader makes a stop loss, the balance in the account is still considerable, enough for the next transaction.

There is no doubt that professionals will look for key points when trading, but they don't care too much about perfect entry. On the contrary, fund managers and big banks generally only look for a key point, they can enter the market when the fundamentals and charts are running, and set a suitable stop loss point, so that they can let the foreign exchange market decide their transactions Whether there is a mistake, rather than judge for yourself.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

JRFX is an online CFD broker providing more than 50 products for Forex, metals and commodities. Open a trading account within a minute. Deposit 100USD and download our MT4 trading platform now! We have unprecedented promotion program!