Forex

Why is Forex Stop Loss position required?

Why is Forex Stop Loss position required?



For commercial success however it is not necessary to emphasize the obligation to establish protective positions SL (stop loss) and TP (take profit), because it simply is clear that the lack of projections of these essential tasks resembling a manifestation of traders excessive and unnecessary security in terms of the investment decision.


Why is Forex Stop Loss position required?, Forex, Forex Market,


To make things even more interesting, in Forex trading is most common cases less experienced operators are used rarely SL and TP, while Treder open position never experienced without Stop Loss and Take Profit. Therefore, it is important for each of the traders who are involved in Forex trading, understand the relationship between risk and benefit appropriately and that this relationship should be proportionally greater in favor of commercial transactions they make, not vice versa.

Since it is quite normal that all trades can always be profitable, risk control allows you to benefit from the trade balance, resulting in a risk-return positive (risk/reward), but you have to count on the "other side of the coin".





An example of the table only shows the scenario situation "undesirable" that occurred due to sudden fluctuations in the market intensified in the opposite direction relative to the position trend after which the price returned to the "desired" initial trend . the situation shown is not a rare occurrence in the foreign exchange market, on the other hand, only one scenario caused problems for many traders, it is good to understand the importance of this event is protective positions.

Therefore, if the position is open in the direction of the arrow (marked in white in the upward direction) the omission of the positions of protection EN result in a potential loss of up to 100 Pisev (position L shows an unexpected loss ), while the negative balance was arrested at the level of the horizontal trend line (marked in red), it is assumed that the SL position.




This monitoring would run the risk was completely finished, and the trade balance is protected by four times greater loss than expected. It should clarify the concept of the planned loss because no trader in the course of trading on Forex, not to mention the loss of the position opening planned. But the increased planning is always projected in relation to the possible trend risk classification, and according to the analysis and trend dimensions, the relationship between the desired profit and capital must have a positive amount in favor of profits (in this case TP: SL = 2: 1).

According to the situation analyzed, buy position is justified by the rates of change above the midline of Bollinger and the next operator candle logically expected further growth. However, it proved to be placed in the early trade because the price suddenly has taken a significant decline, a further increase later turned out to be.

Therefore, the trejd position is compromised in essence and the result is a loss of 25 pips in line with the projected risk of expected benefit (SL = 25 pips, TP = 50 pips). Indeed, no regrets, even though the price of the obvious reached several times the level of the horizontal line trend (marked in white) on which TP projects, but be realistic and happily concluded that the compulsion to enter a position (before leaving rates consolidation channel, while the outer line of Bollinger yet begun to spread) resulted in less loss of potential possible on the basis of price falls to the level point L (unwanted loss).

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