4 TYPES OF STOP LOSSES

Come forward to face it. As the market will always do what it wants to do, and move the way it wants to move. In each new second coming is a new challenge, and almost anything from global politics, major economic events, to central bank rumors can turn currency prices one way or another faster than you can snap your fingers.

It refers that each and every one of us will eventually take a position on the wrong side of a market move.

Lose for sometimes is inevitable, but we can control what we do when we’re caught in that situation. You can either cut your loss quickly or you can ride it in hopes of the market moving back in your favor.

Really, that one time it doesn’t turn your way could blow out your account and end your budding trading career in a flash.

Believe, “Live to trade another day!” should be the motto of every trader on Newbie Island because the longer you can survive, the more you can learn, gain experience, and increase your chances of success.

It builds the trade management technique of “stop losses” a crucial skill and tool in a trader’s toolbox.

As a predetermined point of exiting a losing trade not only provides the benefit of cutting losses so that you may move on to new opportunities, but it also eliminates the anxiety caused by being in a losing trade without a plan.

 Keeping less stress is good, right? Of course it is, so let’s move on to different ways to cut ‘em losses quick!

When we want to get into stop loss techniques, we have to go through the first rule of setting stops.

The stop loss point should be the “invalidation point” of your trading idea.

If price hits this point, it should signal to you “It’s time to get out buddy!”

Later, we’ll discuss the many different ways of setting stops.

There are four methods you can choose from:

1.     Percentage stop

2.     Volatility stop

3.     Chart stop

4.     Time stop

Now, come to start.