stop loss is a type of request to be executed in order to minimize losses if the market moves against you, and it is a predetermined point to get out of a bad deal and it aims to control losses.
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| The stop-loss order |
Stop loss is an order has been placed with a broker which would close the deal automatically when the currency traded reach to the predetermined price, and at a specified level the open transactions will be filtered.Such orders were designed to limit the amount of money that can be lost through the rolling out of the deal when accessing the specified price
For example, the trader can buy EUR/USD at 1.3700 and the stop loss at 1.3665 if price was against you and arrived at 1.365 a request would be filled, the deal would be filtered and that limiting the loss to 35 points only.
Regardless of what has been said by others, there is no doubt about whether the commands should or should not be used and the fact that it should always be used.
One of the hardest things in Forex is to place these orders, determining the stop loss point very close to the price of your entry, you may be responsible for getting out of the deal because of the vagaries of the market, and if you're on the wrong side then made a loss, the small loss can turn into a big loss.
Skeptics have interacted on you are likely out of the deal before the market moves in your favor and most investors have previous experience in making these commands and then watch the price to this level or just below and then go in the direction of original market analysis which makes switching from profit mode to lose mode
Professional traders use stop loss points because it constitutes an important part of the discipline required for success because it can prevent a small loss from becoming larger.
Unexpected news can come from space and greatly affect the exchange rate and this is why it is important.
and seeking to cut losses early when a position goes against you and it is best to stop loss immediately instead of turning the small loss into a big loss.
If you set a stop loss point before entering into the transaction, this is the most objective reflection.
The most important question, what is the price on the basis of it demand is determined? Some traders will tell you that it is a predetermined position and the maximum loss is an amount depends on the balance of your account instead of using technical indicators.
Portfolio managers are advised that the loss should not be more than 2% of your account in any transaction.
If you have 50000 dollars as capital, this means that the maximum loss must be $ 1000 per transaction.