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3 Habits To Follow While Using Stop Loss

Learn three habits that all forex traders should follow religiously while using stop loss orders.

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3 Habits To Follow While Using Stop Loss

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  1. 3 Habits To Follow While Using Stop Loss Orders

  2. Index • Stop Loss • 3 Habits of Setting Stop Losses • Don’t Let Emotions Be The Reason You Move Your Stop • Do Trail Your Stop • Don’t Widen Your Stop

  3. Stop Loss • A Stop Loss is determined as an order that you send to broker telling them to limit the losses on the particular open position or trade. • As for the take profit, it is an order that you send to your broker instructing them to close the trade when the certain price reaches the specified price level in profit.

  4. A lot of traders cut themselves short by placing their stop-loss to close to their entry point, only because they want to trade the bigger position size. • But here is the trap when you place your stop too close because you purpose to trade larger position size, you are really invalidating your trading edge, as you need to put your stop-loss based on the trading signal and the current market conditions, not on money you suppose to make.

  5. 3 Habits of Setting Stop Losses

  6. 1. Don’t Let Emotions Be The Reason You Move Your Stop • Like the initial stop loss, your stop adjustments should be predetermined before you put your trade on. • Don’t let panic get in the way.

  7. 2. Do Trail Your Stop • Trailing you stop involves moving it in the direction of a winning trade. • This locks in profits and manages the risk if you add more units to your open position.

  8. 3. Don’t Widen Your Stop • Increasing the stop increases your risk and the amount you will lose. • If the market hits your planned stop, then your trade is made. • Take the hit and move to the next opportunity.

  9. Widening your stop is basically like not having a stop at all, and it doesn’t make any sense so to do it! Never widen your stop! • Always remember to plan the trade ahead and figure out what to do in each scenario so that you won’t get panic and do something you’d probably regret later on.

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