Stop loss technique.

There are many options for setting stop loss orders when trading forex, each method has its own advantages and disadvantages, so it is best to choose the one that best suits your strategy and the amount of your deposit.

Forex stops are designed to protect the deposit of a large drawdown and the triggering of a margin call or stop out , the latter almost completely deprives the trader of his funds.

Let's move on to a review of the main techniques used to install safety stops.

1. By levels - these levels can be support and resistance lines, significant highs and lows, or simply significant levels.

This technique is based on the assumption that if the price breaks through a significant level in the opposite direction from the existing trend, then there is a high probability that this movement will continue.

Therefore, we set stops:

• When buying - below the support line or below a significant minimum.
• When selling - above the resistance level or a significant maximum.

Do not forget about the possibility of false breakouts, in which case the price can only knock down the stop and again go in the direction of the trend, so the distance for the stop loss should be 15-20 points further than the level itself.

Unfortunately, this option is not always suitable for trading with high leverage; you can solve the problem by switching to a smaller time frame.

2. Candlestick option - used if you entered on a long candle that broke through an important level, in this case, you can set a stop loss immediately behind the minimum (maximum) of this candle. Sometimes stops are set through a candle, the main thing is that there is a sufficient distance between it and the entry point.

3. Based on movement - in this case, the average market volatility will serve as a benchmark; this indicator allows you to determine the current price position.

For example, if the pair moves an average of 80 pips daily, and today it moved 20, then when opening a position following the trend, you can set a stop loss at 30 pips from the current price, assuming it will only be triggered if the price reverses.

Volatility Calculator "

script will help you perform the calculation automatically Stops on Forex should be calculated to minimize false triggers. To minimize losses, you can also use a trailing stop or manually move the stop loss to the breakeven zone.