Risks are lurking in every transaction of foreign exchange traders, so risk control is particularly important for traders. The stop loss is an effective means to control risk. There are many ways to stop loss, I will introduce the stop loss strategy of foreign exchange channel for you today.
First of all, the first question: What is the stop loss of the foreign exchange channel? There is a simple market trend following strategy in foreign exchange trading: determine the direction of the market trend, and then set the stop loss point to keep moving forward in the direction of the market trend. In this way, traders can use the movement direction of recent price highs or recent price lows to determine the direction of market trends.
Forex traders can use the K line to determine the stop loss point. The more K lines there are, the more room for change in the transaction. At the same time, the greater the profit retracement that traders can make before triggering the stop loss. The closer the price high or low is used, the faster the stop loss will be triggered. This trailing stop loss method for foreign exchange trading is called channel stop loss.
The second question: How to use the channel stop loss strategy? It’s actually very simple. Assuming that the trader chooses the 30-day channel as the stop loss point in the foreign exchange process, the trader must record the lowest price point of the last 30 days every day and use this as the stop loss point. When the price of the foreign exchange market moves in the direction of the trader’s order, the low point in the last 30 days has also continued to move up. Therefore, the channel stop loss strategy can not only track the trend, but also protect the trader’s accumulated profits.
The trader also needs to know that the channel stop loss point will only move in the direction of the trader’s position, and will not move in the opposite direction of the trader’s position. this point is very important. For most foreign exchange traders, the channel stop loss strategy is an ideal way to stop loss, because it can be used flexibly and can be displayed intuitively on the foreign exchange trading platform.
Regarding the stop loss strategy of the foreign exchange channel, I will introduce it to you today. In fact, no matter what kind of stop loss strategy, traders should fully understand the market and their own situation before placing orders.