STOP LOSS AS LIFE SAVIOR
XAUUSDStop-losses prevent large and uncontrollable losses in volatile trades. If you’re not using stop-losses, it’s only a matter of time when a large losing position will get out of control and wipe out most of your trading profits, eventually even your entire account!
If you’re serious about staying in the game in the long run and growing your trading account, it’s necessary to use stop-loss orders in every single trade you’re taking. That’s the first rule of this article – Always use stop-losses!
Stop-losses also play a major role in risk management. Depending on their stop-loss, traders are calculating what position size to take, how much money to risk on a single trade, how much they’re risking on any single dollar they’re making, and much more.
Time Stop
As their name suggests, time stops refer to closing a trade after a pre-specified period of time. For example, a trader who is day trading the market could close all of his open trades after the end of the trading day, while swing traders who don’t want to hold their trades over the weekend could simply close all trades by the end of the Friday trading session.
Time stops are best combined with other types of stop-loss levels. If your trade is still active by the end of the trading day or ahead of the weekend, you could look to close it manually in that case.
Percentage Stop
Finally, percentage stops are based on a percentage of your trading account to limit the total risk of a trade. For example, a trader with a $10,000 account who wants to risk 3% of his trading account on a single trade could place a stop-loss at a level that ensures his total potential loss is $300.
Some traders might think that percentage stops are a good way to manage and limit losses in the market. However, bear in mind that percentage stops imply placing a stop-loss at an arbitrary level, as long as the total potential loss doesn’t exceed a percentage of the trading account.
Much better results can be achieved by combining chart stops with percentage stops, i.e. a trader would place a stop-loss based on an important technical level and manage his total risk by adjusting the position size of the trade. We’ll show you how to do exactly that later in this article.
Trailing Stops
Trailing stops automatically move the underlying stop-loss level with each tick of the price that goes in your favour. However, if the price reverses and starts to go against you, a trailing stop will stay at its most recent level, limiting your losses or locking in unrealised profits.
CONCULUSION :
WETHER YOU DO FOREX , STOCKS OR CRYPTO TRADING , STOPLOSS IS IIMPORTANT , AND IT ALWAYS GIVE YOU ANOTHER OPPURTUNITY TO TRADE AGAIN
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