Is a stop loss always necessary?

It just so happens that some Forex traders do not really like to place a safety stop loss order.

There are many reasons for this, but the main one is the awareness that the transaction may be closed at a loss, and the price will again move in the direction of the closed order.

That is, the price forecast was correct, it’s just that the correction turned out to be slightly larger than the value of the set stop loss .

In addition, it is also difficult to calculate the value of a stop order and find the point for its installation, because in this case a lot of parameters should be taken into account.

Therefore, many traders ask the question: Is a stop loss always necessary when trading Forex?

Surprisingly, not always. There are cases when it is not necessary to establish this order, there are not so many of them, but they still exist.

Short-term scalping - namely, pipsovka. If the lifetime of an order is only a few minutes, and the profit from one transaction is only a couple of dozen points, then it is simply physically difficult to set a stop loss when opening each new position.

Hedging or locking – if trading tactics such as hedging are used, you can also refuse to set stop orders. Since in this case, losses on the first transaction will be compensated by profits on the second.

In this case, as an alternative, pending orders in the opposite direction located on the border of the risk zone can be used, that is, as soon as the first transaction begins to generate losses, the second one will open, but in the opposite direction.

Trading without leverage – if you use only your own money for trading, and the volume of opened positions is equal to the amount of your deposit.

That is, it is better to set a stop order.

But even if you don’t set it, the losses are unlikely to be critical as with margin trading. In addition, a stop loss is not needed if, after entering the break-even zone, you change it to a trailing stop , thereby also protecting your transaction from unfavorable trend reversals.

Read also:

Automatic stop loss and take profit script - http://time-forex.com/skripty/automatic-stop

Automatic stop loss move script - http://time-forex.com/skripty/stop-loss-move