Exceeding losses in the forex market
Experienced traders know, and novice traders will once again say that break-even forex trading is not happening. Some trades will be closed with losses. The question is what is this part. The trader’s task is to achieve a level of professionalism in which the number of profitable trades always exceeds the number of unprofitable trading orders. To solve it effectively, you need to get the right skills in loss management.
There are two options for working in this direction. The first is that the trader immediately sets a stop-loss when opening each trade, which will limit the amount of possible losses. I would like to point out that this method also plays an important psychological role in trade. By installing a stop-loss, the trader as if he agrees to give back part of his funds, in case of adverse developments in the market. Therefore, the degree of emotional stress is reduced. The second option is not so popular, but it is practiced by some traders. This is socje losses in forex trading. This is what I want to talk about in the article.
Basic methods of prolonging losses
Losses due to overruns do not mean that the trader completely abandons such a tool as stop-loss. Sometimes it is installed, but this is done at a very long distance from the opening price of the transaction. This reduces the likelihood of closing an order at a loss with little price movement against it. In fact, the trader can wait for the price at the end of the turn. And an active order from the loss-making will become profitable. Well, if there is a global trend change in the market, the trader will keep a significant part of the deposit thanks to stop-loss. Often with this method of incapacitating losses, the trader applies the known ratio between take-profit and stop-loss 3:1, but only vice versa. This means that the TP size is three times smaller than the SL size.
The second method is accompanied by an increased risk. Sisting losses occurs without the use of stop-loss. In other words, the trader opens a trade. And then patiently waits for a favorable result, even if the market does not agree with the direction of open order, and the loss increases.
I want to warn you that this method poses a big threat to your deposit. It can be merged relatively quickly. Sometimes the trader urgently needs to replenish the trading account in the hope of changing the situation for the better. The disadvantage of this method is also the fact that the order can hang for a very long period of time. It is not known when the price will return to the desired level. And whether he will come back or not, that’s also a question.
In my opinion should stop-loss trading is the preferred option for the investor.
Peresi’s record loss in the forex market first appeared Forex Trading Magazine | forex-for-you.ru.