It is worth pointing out that when active trading position becomes a losing one it doesn't mean that our trading balance is going to actually shrink this time until we allow it to shrink by either accepting the loss and closing a position or moving our Stop loss too close or too soon or something else.
The art of placing Stops in Forex trading determines the success of failure of every trading order opened. It sets apart Forex traders that lose from Forex trader who win... on the same time frame, under the same market conditions!
Here are some Stop placing tips that may help avoiding painful losses in Forex:
1. Don't accept losses too soon, do your market research and have confidence in the trend you trade with.
2. Trading smaller lots increases tolerance to open negative trades. Small lot trading with wide stops is much better than big lot trading with tight stops!
3. Setting initial stop wider than you'd like to, gives a space for a new trade to develop in. Don't set stops tight, let the trade to mature, then move your Stop to a desired position.
4. Bring stop to break even to protect your balance, but not when you are +20 pips, wait till you get at leat +50 pips!
5. Set fixed targets near important support/resistance levels so that you can be sure that your trade has a fair chance to hit the profit mark rather than turn against you!
Cheese from Mouse ~C:>
Friday, February 22, 2008
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