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Stop-loss

Why do most traders end up losing moneyThis question is quite scary, but if you are a novice and see this question, congratulations, you are on the right path of trading. The most important lesson to learn before entering the financial markets is risk expectation. You can ask yourself, how much money do you want to make from trading? Is your goal asset appreciation, or a small fortune? If a trade loses money, will it affect your own life? Is your own character able to stop losses in time, or do you have no self-control? After asking these questions, we decide whether to enter the financial market. So why do the vast majority of traders lose money? 1. Because of the particularity of the financial market. I believe that many friends have heard of the 28 rule. For example, in the distribution of wealth in our society, 20% of people control 80% of social wealth; 20% of people will persist in encountering difficulties, and 80% of people will give up when encountering difficulties. The rule of 28 is ubiquitous in life, and it also determines what kind of people will succeed and what kind of people will fail. As for the financial market, it is crueler than real life, because there are no rules in this market, only human nature, so the financial market even surpasses the rule of 28, and less than 10% of people may make profits. In the face of money, most people want to make a big fortune with a small amount, and want to turn around by trading, so those who have stable personalities, strong self-control, low income expectations, and money in their hands are silently harvesting these people who are eager for quick success. Some people may say that the world is inherently unfair, and those who hold funds can only survive because of the capital. Actually no. We Xiaosan hold small funds, and we can achieve low return expectations, or we can do it slowly, but how many people are just anxious to make money? Just want to make a big difference with a small one? Just don’t regard money as money, and think it’s a big deal to take a gamble, and if it’s gone, it’s gone? So it has nothing to do with the amount of capital, but has something to do with people. In financial markets, human nature is the rule. 2. Too many people are dominated by human nature. As I said before, there are no rules in the financial market, and human nature is the rule. Trading is a very anti-human thing. Human nature is greedy for comfort, averse to risk, afraid of losing, feeling that one's level is higher than others, hating giving and learning, impatient, etc., which will be infinitely magnified in trading. There is a saying in the trading industry that trading can be profitable, mentality accounts for 70%, and technology accounts for 30%. In actual combat, it seems that it is not difficult for traders to see the market correctly, but it is very difficult to complete this wave of market and make profits. Why? I give two examples. For example, the problem of stop loss in trading. Seeking advantages and avoiding disadvantages is a characteristic of human nature, unwillingness to lose, unwilling to accept losses, this is human self-protection awareness. Stopping losses in the wrong direction means losing our real money, who can bear it? So in actual combat, many people rationally know that the direction is wrong, but they just don't stop losses, and even increase their positions against the trend, floating orders, allowing the stop loss to become bigger and bigger, and finally lead to serious losses. Another example is the profitable position in the transaction. The market trend always fluctuates upwards, or fluctuates downwards, and profit taking in positions is often encountered. Once profits are withdrawn, we will have a sense of insecurity in our hearts, worrying about the reversal of the market and losing profits. This insecurity is also due to human nature. Even if we rationally know that the profit target has not yet been reached, we should continue to hold positions, but the little emotion of longing for peace of mind has been tormenting us, and in the end we couldn't help but close the position, and made a lot of less money. We comfort ourselves that it is all right, at least there is no loss. But in fact, less earning = loss, because the amount you lose next time will be greater than the money you earn. In the long run, your overall loss will be. There are many such examples, such as betting on the market, heavy trading, unwillingness to admit defeat, stop loss leading to liquidation, etc., are all caused by the aversion to loss in human nature and the fear of failure. In fact, if we look at the trading market 100 years ago, it is basically the same as the current human nature problem. The weakness of human nature is very strong, and it is also the main reason why traders lose money. So at the beginning, I asked everyone to ask themselves those questions, just to let everyone understand their own personality, their current situation, and their human nature, so as to help you win certain opportunities in the trading market. Trading is like a free game. It seems that the threshold is low and no money is required, but in fact some hidden costs are contained in it, and the human nature is clearly played for you. Therefore, before making a transaction, you must have an existing risk expectation, and then think about making money.
FOREXCOM:XAUUSDEducation
by CheetahAttack
STOP LOSS: Your saving angelWhat is a stop loss? Why do i need to use it? Why should i listen? Stop loss is designed to limit an investor's loss, it is built FOR YOU. It's like fighting a boss without a weapon, yet there are multitudes of weapon ready to be used for you beside you. Why should i use a stop loss when my liquidation is far? MARKET VOLATILITY IS AT THE HIGHEST RIGHT NOW, not only cryptocurrency, but also stocks and commodities. The world is in shambles, and with 90% of the world experiencing a loss, we want to be in that 10% profiting from the volatility. I won't explain further how to set stop losses in binance or huobi, you can always do a simple google search or watch 2 minute videos on youtube. Literally. Sorry i cannot place any links in here. I know this is short, but long posts are generally skipped by most of the newbie traders like me. Lets hope we all can be millionaires soon. May you all and i be blessed with good luck.
Education
by cryptoneubie
3
FIB-Extensions and why you might use them wrong!#Cypher-Pattern!Hey guys, here is my last video about FIBONACCI and its extensions. :-) No offens to those you use it in a wrong way -I did the same mistake! I just wanna show you how you should do it and wanna help you to improve your trading. :-) If you don`t really understand why, just check the first Video of my Fibinacco-series. Peace and good trades Irasor Wanna see more? Don`t forget to follow me. Any questions? Need more education or signals? PM mw. :-)
Education
by Trading2ez
Lesson 5: Stop-Loss Strategy | A must needed for tradersHello Traders, I am back with yet another helpful lesson for y'all. This one is a must needed for any trader, and it is extremely important to get this right. A lot of people face a situation when they buy a coin at a higher price, and it just starts going down, and you just hold it in the hopes that it will go up soon. But instead, it just keeps going down more and more. Believe it or not there are many people out there who are still holding that coin because of just one mistake. They did not had a stop-loss order opened after they bought a coin. If they had a stop-loss order opened up, they would have been out at a minimal loss rather than waiting few months for the coin to come back up. If they had set up a stop-loss order, they could've bought the coin at its lowest, and then earned all those profits in lesser time. Don't you worry. I will go over this in a simple way so you can understand this topic really well. Keep in mind this is extremely important to cut your losses especially when we are not sure about the direction that BTC is heading in. Below are the topics we will go over today: What is a Stop-Loss Order? Strategize your Stop-Loss order price Advantages of Stop-Loss Disadvantages of Stop-Loss Note: For the above topic, please refer to the BTC chart above. Lets go over the topics now. What is a Stop-Loss order? A Stop-Loss order is an order set by a trader which will sell the coin if its price reaches below a set price (Stop Price) in this case. Basically if we buy a coin at $10, and you set a stop price at $8. Now, if the coin goes below $8, and if you have a Stop-Loss order up, it will open a Limit Order at the limit price you gave once the price reaches below your set Stop-Loss price. In simple terms, lets look at an example below: i0.wp.com Coin Buy price: 23000 Coin Stop: 20000 Coin Limit: 19000 Refer to the link above to see a image of how stop-loss looks like on Binance. Now lets say you buy a coin at 23000, and after you buy it, you set a stop-limit sell order with a Stop price of 20000, and sell (limit) price of 19000. So now once your coin goes below 20000, the system will automatically open a sell order at your set limit price which in this case is 19000. The benefit of this is that it cuts your losses if the coin keeps going down from that level. I know what you might be thinking right now. What if the coin doesn't keep going down from that level. This would go against you then. You are correct, but it is extremely important at what price you set your stop loss order at. We will discuss that strategy in the next topic below. I hope it is clear to you so far. That was just the intro on what Stop-Loss actually is. Now we can look at what sort of strategy we can use around it. Continue reading below....
COINBASE:BTCUSDEducation
by MoneyChartz
3
What is the job of a trend-following trader?The chart is not going to tell anyone whether to go long or short. I cut deeper than that. This post is about what I see as the job of a trader, who wants to be consistently profitable over a long time using trend following strategies. The following therefore excludes systems that tend to have fixed targets, such as harmonic trading and exploiting levels of support and resistance. Trend-followers usually do not have fixed targets as they do not know how far a trend would go before changing. My job as a trend-following trader is to do the following: Estimate probability of direction of future price movement based on a sound system of analysis. Engage losses but make them controlled and reasonable within a sound methodology. Exploit probability of price movement in a favoured direction by trailing the trend. Have realistic expectations of gain in any single trade relative to the Average True Range (or other suitably reliable measure of volatility). For trading situations where the Average True Range is high, stop-losses need to be acceptable and broad. Sometimes 2 x Average True Range is used as a rule of thumb. However, human judgement has to prevail. On occasions some instruments have a pattern of spiking deeply down or up, and recovering. For those a stop-loss of 3 x Average True Range may be better to avoid being stopped out. If 3 x Average True Range or even 2 x Average True Range is unacceptable as a loss I do not enter the trade. Too often new traders are spiked out and left behind. Average True Range varies by time frame and naturally so does visual appreciation of volatility. Make volatility your friend - and treat her with respect. Develop ' nerves of steel '.
Education
by Captain_Walker
2 TARGETS EXPLAINED - POSITION SIZING - BANKING PROFITS Hi All, I recently have been asked to publish this diagram for executing a 2 target order. I have labeled the diagram with order sequence in a perfect world scenario. Steps below relate to numbers on chart I am not telling you this is how everyone does it and this is only based on the questions I have been asked, every strategy has its own order entries stops and targets. 1. Price action comes down to hit your Limit Order Entry/Entries - when we find the reason for entry in this case we have identified this as an advanced pattern. When price action has at least past the B leg and we anticipate that price will continue downwards towards our D completion and predict where the Market is most likely to go after this, we then decide on our entry type and execute the order - The most important thing is to know where your entry stops and targets go before the entry level is reached. We mark these area's out and place 2 Order Entries @ Half position size. So let's say you would like to buy 20k EURUSD and the spread was 2.3 pips with a pip cost of $1 per 10k (minilot) trade. The cost would be: 2.3 pips * $1 per minilot * 2 minilots = $4.60 Now let's say you bought 20k in EURUSD, but this time, you bought two separate minilots, 10k and 10k. The cost for this would be Position #1 - 2.3 pips * $1 per minilot * 1 minilot = $2.30 Position #2 - 2.3 pips * $1 per minilot * 1 minilot = $2.30 The 2nd scenario costs the same as the 1st but allows two different sets of stops and limits (one set per ticket). So now we have the Order in Place with your target 1 and 2 and only exposing you to a stop loss of your original 20k After D has completed you need to make sure to bring your targets down until D has completed. 2. Now you have your order filled, based on historical data and forward testing results in the most likely of places price will retrace to being the 38.2% for T1 and 61.8% for T2 - now in your testing results you may just take one position and use the 50.0% for your one target. Keep in mind this is just an example. We have already banked our target 1 with 43pips - Price can do 3 things Go up Sideways or down. We hope price would just continue to hit our T2 - in this case price will retrace when sellers have their orders in at the 38.2% 3. We then move our stops up for position 2 to break even. 4. Price action usually will retrace and can indeed come back down to stop you out for a break even trade on position 2 but this has already banked 43 pips at 10k Half Position. 5. Price action doesn't stop us out and we are looking for Target 2 to be acquired, when T2 is obtained we have completed a perfect trade. And target 2 has banked 69 pips You can also trail a stop when the price action hits T1 if you need to sleep or leave for some reason and don't want to leave the position exposed to loss if it turns in the wrong direction. You can take step number 4 after the retrace and use the LLLC candle wick and trail the stop 5 pips below or above the HHHC candle wick depending on bearish or bullish. Note: some brokers or platforms do have the feature to have two limits on the one order. Also note the dollar figure is great that's what we all want is to make money in the market, the most important thing though is to not go broke, protect capital, dont expose yourself to too much risk, bank profits and don't be greedy. Being a consistently profitable trader putting yourself in the highest probable trades, Like Warren Buffett Says The stock market is a device of transferring money from the impatient to the patient. Their are a million ways to make and lose money in Forex - good luck I hope this helps for all those who asked to post it
Education
by Oztrade
2
Stop Losses, Love Them Or Hate ThemStop losses aim to end a trade when the market goes so far in the opposite direction, that the trade idea no longer makes sense. It’s the point of invalidation . Ideally, they get hit on bad trades only and not on good trades. The area between entry point and stop loss is a zone where the trade is at a loss, but can still recover. This is not an invalidation of the trade. It’s a balancing act : place the stop orders far enough beyond your entry point to give the trade room to breathe and allow the price to rebound in the profitable direction, yet close enough to it to protect your account against a big loss in case of an invalid setup. When you put on a trade, you take a risk. Acknowledging this means accepting this risk and quantifying it before you enter a trade. Not using a stop loss, to me signals not accepting the risk and thereby increasing it because if you don’t use a stop loss your account becomes one . I see not cutting losses early as a fear based trading error. I always try to trade another day and stops give me piece of mind. Automatic stops are even disconnection and hardware problem proof. Everything in trading is a trade off, so there are disadvantages: when it is hit and price reverses, or if its placed wrongly. My philosophy when managing a trade is that either I am right, or I should be out. So what is the ideal place for stop losses? Trying to answer this is like searching for Columbus´ egg . And I haven’t found it yet. It’s a personal decision and I have no overarching rule. For each play in my playbook, I describe where to put the stop loss. I don’t use a fixed amount of pips; in stead I let the trade setup conditions dictate its position. With 5-point retracement structures like the Bat pattern this would be beyond the X-point (because if price moves across this level, then it was not a retracement structure and if I am not right, I should be out). For 2618 plays this would be beyond the tops / bottoms, for channel trades beyond the trend lines and for other plays I use support and resistance levels. I always put the stop losses at a certain distance of these invalidation points, as price may pierce through them before reversing. How far they are placed from my entry point varies, depending on the timeframe and the size and configuration of the pattern I am trading. I always adjust my position size so that in each case the amount of pips from the entry point to the stop loss represents my maximum trade risk (as a fixed % of my trading capital). As a consequence the position sizes I use vary from trade to trade but my risk does not. So, for any winning trade, how much profit I make per pip is proportional to the distance between entry point and stop loss. The placement of a stop loss also influences both the win rate and reward / risk ratio and therefore the expectancy. So its placement is absolutely key. When I am in a winning trade, I roll the stop loss in the profitable direction to lock in part of the profit, thus ensuring the winning trade does not turn into a loser. The stop loss has now become a profit protection point and the trade has become a management of profit. As a rule, I must have hit my first profit target, before I can do this manual trailing. These risk free trades, essentially trading with the markets money, are awesome. Rolling the stops in the opposite direction is a no-go: stops can only be tightened, never widened . I can´t talk about stop losses without mentioning "stop loss hunting” . This refers to situations when the market quickly spikes and hits your stop loss so you are out with a loss, only to reverse and continue in the direction you predicted. I will not get into whether it’s the broker, the banks or institutional traders that are behind this (looking for liquidity to fill their positions), but this price behaviour does happen and taking it into account pays off.
Education
by JazzForex
66