| PREVENTING BIG LOSS WHILE TRADING |
Preventing Big Hits - by Ryan Forrester - ryza@deluxnetwork.com, (part time trader/programmer)
Setting a smart STOP loss is good for protecting your balance
If your in a long trade going for say 3 days, and you are -100 pips down then you will need a very high STOP loss or none at all to stay in the trade, without having a big STOP loss or no STOP loss at all you could get a Margin-Call and lose it all.
This is the risk you take while being involved in long term trades.
Below i have used a STOP loss example of 40pips. If u lose 40pips or more your trade will close.
Your STOP loss can vary depending on how long you want to trade for,
Short-Term traders will have a lower STOP loss in place while long term traders may take more risk.
Here is an example table I have made, the POSSIBLE LOSS is the STOP loss.
| REAL LOSS |
POSSIBLE LOSS |
POSSIBLE SAVINGS |
| 67 |
40 |
27 |
| 104 |
40 |
64 |
| 74 |
40 |
34 |
total loss prevention: 27+64+34 = 125pips
While every trader has there own stradegy;
If overall your taking a lot of big hits then you should consider using a lower STOP loss.
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