Always Use a Stop Loss

[Tobi]

A stop loss is a predetermined amount of risk that a trader is willing to accept with each trade. The stop loss can be either a dollar amount or percentage, but either way it limits the trader's exposure during a trade. Using a stop loss can take some of the emotion out of trading, since we know that we will only lose X amount on any given trade. Ignoring a stop loss, even if it leads to a winning trade, is bad practice. Exiting with a stop loss, and thereby having a losing trade, is still good trading if it falls within the trading plan's rules. While the preference is to exit all trades with a profit, it is not realistic. Using a protective loss helps ensure that our losses and our risk are limited.

 

[gwolf666]

I totally agree, a stop loss is like a safety belt for your capital . It protects us from large losses and helps us stay calm during trading. Even if we sometimes have losing trades, sticking to the plan and respecting the stop loss is key to surviving and growing in the market. Ultimately, limiting risk is more important than chasing quick, uncertain profits.

 

[Fidelia]

I haves been hearing about "Stop Loss" in forex. And I learned that it is a safety net that helps to minimize the loss in a particular forex trade.

 

[Suba]

If you use the term stop-loss, it means you're using an automated order to reduce losses by selling an asset when the price reaches a predetermined point/level.
However, when setting a stop-loss, you must be realistic and adapt it to market volatility. Don't set a stop-loss too close or too far from the purchase price, as this will reduce its effectiveness.

 

[kit_hung]

Think of **stop loss** as your personal security guard in the market. Before you even enter a trade, you tell your security guard, "If the price hits a certain point, get me out of this trade quickly." This reduces your risk and protects you from a sudden, large loss.

As you said, **stop loss** takes away emotion. Many of us are afraid of losing and may just wait in the hope that the price will go up, even if it drops quickly. That hope often ends in a bigger loss. **Stop loss** keeps you disciplined and makes you trade with reason instead of emotion.

Entering **stop loss** and taking a small loss, as you said, is not a real loss, but a wise decision. It is part of your trading plan. Most successful traders see small losses as a cost of trading and not as a failure.