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Forex traders can't get started without knowing the stop loss method


  How can foreign exchange investors make effective profits is the core issue that all foreign exchange traders are concerned about. In order to achieve effective profits, investors should not only have excellent foreign exchange trading technology, but also have experience in controlling risks. Stop loss is one of the ways to control the risk of foreign exchange speculation.

  1. Stop-loss method

  Before entering the market to trade, investors clearly plan how many points to lose before leaving the market. This is a good money management method, but it is also mechanized, so the premise is that the trader must have a win rate of more than 60%, while ensuring that the total number of profit points is higher than the total number of stop loss points. Secondly, it is necessary to have a deep understanding of the volatility of the market operation and a comprehensive judgment of the market trend.

  2. Programmed stop loss method

  Programmatic indicators refer to the indicators designed by traders themselves according to price, time, funds, and trends, and then buy and sell according to their own indicators, when the indicators no longer exist, they immediately stop or exit the transaction. Its advantage is that it can overcome the weakness of human nature, as long as the indicator has no signal to buy and sell again, there is no reason or reason to continue to trade in the market, to immediately stop profit or loss, waiting for the next opportunity.

  3. Technical stop loss method

  More complicated is the technical stop-loss method. It is the combination of stop loss setting and technical analysis, after eliminating the random fluctuations of the market, set a stop loss order at the key technical level, so as to avoid further expansion of losses. This method requires investors to have strong technical analysis ability and self-control. The technical stop-loss method is more demanding on foreign exchange investors than the previous methods, and it is difficult to find a fixed pattern.

  There are also several more flexible stop-loss methods, which require investors to make their own flexible response to the trend in a timely manner

  1. Initial stop loss method

  A pre-set stop loss position before buying forex, such as 3% or 5% below the purchase price (short term, the midline should not exceed 10% at most), and exit immediately when the price effectively falls below this stop loss position. The "effective break" here generally refers to 20 to 30 points.

  2. Break-even stop loss method

  Once you do more, the price rises rapidly, you should immediately adjust the initial stop loss price, the stop loss price moved up to the break-even price, this method is very suitable for actual operation.

  3. Trend stop

  Take a trend line or moving average that has worked well in the field as a reference coordinate, observe the price movement, and once the price effectively falls through the trend line or average, exit immediately.

  4. Unconditional stop method

  A stop loss that flees regardless of cost is called an unconditional stop loss. When the fundamentals of the market have taken a fundamental turn, forex investors should abandon any illusions and fight regardless of the cost in order to preserve strength and fight again. Changes in fundamentals are often difficult to reverse. When the fundamentals deteriorate, investors should make a decisive decision and cut their positions out.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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