💎 How to set up Stop Loss in Forex Trading?
💎 How to set up Stop Loss in Forex Trading?
What is Stop Loss?
Stop Loss is the price level at which a trader wants to exit from a trader by booking a loss. So that traders can save their capital money as much as possible.
Stop Loss is the Life Saver. It is not a loss Booking
Why setting up of Stoploss is so important? 🌴
First, You should keep in mind. Only 20% of Traders used stop-loss in their actual trades and you also know that only 10% of traders are profitable by Forex Trading in long run. if we put our deep focus on these traders we find these 10% traders always try to save their original capital from loss and one thing these traders are used always is "Stop-Loss".
So, Stop-Loss is important for the following:-
- Saving Equity or Capital.
- Prevent Trading Account wash.
- Encourage Trader for Increasing Trading Accuracy.
- Built Strong Mental Psychology for Trading.
- Money Management in the case of Immediate Market Reversal.
- Evaluation of Trading Strategy is Easy if Trader use Stop Loss Price Levels.
- Stop-loss establishes the real definition of Trader (Trader, who knows where to exit from trade, before placing actual trade-in system).
Now, points come into the picture.
- How to set Stop-Loss?
- Where to set Stop-Loss?
First, we learn how to set stop loss in System.
For Computer Users
For App Users
In the above Images, I have used the StopLoss as "1783.51"
Second and Most Important Question among Traders,
Where to put Stop Loss?
As we know that we put stop loss for the closing the trade or exit from the trade.
Thus we have to Identify the situation where running trade is invalid for us in terms of profit and we assure that the Market is turned in the reverse direction from the expected direction.
So that Stop Loss level totally depends upon the Trading Strategy you are using. here we discuss some examples of different Trading Strategies.
Swing Trading Strategy 🧎♀️
For the Swing Trading Style, We should place the stop loss level on the first nearest level of "Swing". But this may be hit in 70% of cases. Because Stop Loss Hunters know that there will be stop-loss levels set up by some Swing Traders. So kindly add some "PIPS" in the Swing Level which are not "Rounded Off" to "10s".
As per the India Stock Market Guru Sh. Sunil Mingalini Ji, Swing Traders should place the stop loss in "Second Swing" because It hits only when Market Trend is Changed. But In the case of Forex Trading, This Second Swing Stoploss hit can make a huge amount of Loss.
Thus you should only use the "first swing" stop-loss levels adding with Some "Non-Rounded" price values.
Non - Rounder Examples:-
First Swing Price = 1748.30 then add some Pips like (13, 17, 23, 28, etc). Kindly do not use Pip values which Rounded off Stop loss value to Round Integers for example "1748.30 + 0.20 = 1748.50" (Don't use these)
Scalping Trading Strategy 🤞
For Scaling Trading Strategy, the level of Stop-Loss depends upon the Time Frame which you are using if you are using 05 Minutes or 15 Min then it sounds good. But if you are using 01 Minute Chart. then you should put your eyes directly on trade for closing in case of reversal. because 01 Minute Chart Manual Scalping Trading Strategy needs a quick decision and there will be a change you will not get enough Time to put Stop-Loss order.
Generally, Scalping Traders puts the Stoploss level near the close of the second or third candle by adding some more "PIPS". These some 10 to 30 PIPS can save you from Stop-Loss Hunters.
Positional Trading Strategy 🐱👤
The Simplest way of setting up the Stoploss levels in Positional Trading is the level of Support or Resistance Level. This level could be a line or Moving Average. In this method also you should add some more "PIPS" on the stop-loss level for the prevention from stop loss hunting.
There are some more Techniques for Setting up the Stoploss Levels, For Examples:-
- In the case of Sell Trade, Bollinger Bands Upper Level (+2 Standard-Deviation) addition with some PIPS.
- In the case of Buy Trade, Bollinger Bands Lower Level (-2 Standard-Deviation) addition with some PIPS.
- If you are using ATR( Average True Range) for Taking Profit you can also use the ATR for Stoploss levels.
- If you are using a pure Price-Action Trading Strategy then you can set up Stoploss level on the nearest first Candle closing price level also.
Tip:- If you are in front of the screen and you are completely sure "I have placed wrong trade." then close the trade immediately. Don't wait for hitting stop loss level.
#Forex #Trading #Best #Knowledge #KHOPADI #latest
Stop Loss is the way of securing our hardcore money. The trader can set up their stop loss level as per their risk-taking capacity and Trading Strategy. But Trader must put stop-loss in the system itself and not in the human mind. because of human emotion, we can not handle it properly.
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