Reasons for setting stop loss

Despite all the beliefs, many Forex newbies stubbornly continue to ignore setting a stop-loss order, seeing no compelling reason to use it.

Some insist they'll close the trade themselves if danger strikes, while others are confident in their forecast and don't believe the price will reverse.

In reality, setting a stop loss is necessary for several reasons that newbies don't always realize:

• Deposit protection – or a pre-planned loss amount, the most obvious reason, allows you to avoid losing your deposit due to a rapid candlestick movement against your position.

• Hands-free – you get the opportunity to step away from the monitor and not constantly monitor your trade, but only check the situation from time to time.

• Psychological aspect – the market does not put as much pressure on you; when you set a stop loss, you have already internally come to terms with the planned losses and are not so worried about the deal.

• Protection from excitement – ​​when the trend is going against you, you always want to wait until the price returns to its previous rate, which results in losses that go beyond reasonable limits.

• Recognize your mistakes – often, after the price triggers a stop loss, it goes back in the previous direction, but this only indicates that your market analysis is flawed and you miscalculated the correction size.

Thanks to a stop order, you begin to learn how to analyze the market, and placing one allows you to preserve your deposit for future, more successful trades.

Related articles:

1. Stop loss technique - http://time-forex.com/praktika/tehnik-stop-loss
2. Stop-loss moving script - http://time-forex.com/skripty/stop-loss-move
3. Automatic Stop Loss and Take Profit - http://time-forex.com/skripty/automatic-stop