Foreign exchange investment is as risky as stock investment, so how to avoid risks has attracted much attention. Stop loss is an important way to control risks in the foreign exchange market. What are the foreign exchange stop loss strategies? In order to help investors better participate in foreign exchange transactions, the following introduces foreign exchange stop loss strategies.
Foreign exchange stop loss strategy
First of all, stop loss refers to the maximum loss that an investment account position can withstand in foreign exchange transactions. Beyond this limit, traders must close or lighten positions to prevent losses from expanding. In the foreign exchange market, stop loss is a necessary means to control risks. How to use stop loss tools reasonably should be analyzed in detail by investors.
Foreign exchange stop loss strategy:
- Fixed stop loss method
The fixed stop loss method is the most commonly used and simplest stop loss method. The fixed stop loss method means that the amount of losses that can be tolerated is set in the software as a fixed proportion, and when the probability of loss exceeds the proportion, the position is quickly closed. The fixed stop loss method is generally applicable to investors who have just entered the market or investors in risky markets (such as futures markets). The fixed stop loss method is more mandatory, and investors do not need to rely too much on the judgment of the market. The correct setting of the stop loss ratio is a skill that every foreign exchange novice should learn.
- Technical stop loss method
Technical stop loss method refers to the setting of stop loss based on technical analysis, eliminating the factors of random market fluctuations, and setting stop loss orders at sensitive technical positions to avoid further expansion of losses.
From its meaning, we can see that the technical stop loss method has very high requirements for investors’ technical analysis ability and self-control. The technical stop loss method does not have a fixed pattern. Because of the high technical content, it can be used to bet big profits with small losses. For example, after buying at the lower rail of the ascending channel, wait for the end of the uptrend. Close the position and set the stop loss near a relatively reliable average moving line.
- Unconditional stop loss method
The unconditional stop-loss method is just what the name implies: a way to stop loss regardless of cost. When the fundamentals of the foreign exchange market undergo a turning change that is contrary to their expectations, investors should not hesitate to act decisively and throw it out regardless of cost to save capital and fight in the later stage, because it is difficult to reverse the development trend. . Foreign exchange investment is also a test of investors’ psychological quality and self-control ability.
This is the introduction of the foreign exchange stop loss strategy. Investors should choose the stop loss method that suits them according to their own situation and make settings in the operation.