Foreign exchange transactions must stop loss, and all investors who conduct foreign exchange transactions may have survived this sentence, but few people know why they must stop loss. Stop loss in foreign exchange transactions is one of the most important means to help investors control risks. Next, Yuhui International will introduce to investors the importance of stop loss in foreign exchange transactions.
To know the importance of stop loss in foreign exchange trading, you must first have a clear understanding of the meaning of stop loss.
The risk of foreign exchange trading is very large. The so-called risk is the maximum loss you can bear. If a novice loses money in foreign exchange trading, he is unwilling to go out and fantasize about getting out. However, prices are often gone and losses continue to increase. For professional traders, they will quickly get rid of losing trades. Once the market does not match their judgments, they will quickly admit their losses, control their emotions, and continue to play the next trade. This requires the setting of stop loss to quickly control one’s own position for liquidation.
Successful investors may have their own trading methods, but the common feature of these trading methods is stop loss. There is no risk in the investment itself, only the out of control investment has risks. Controlling risks in foreign exchange speculation is the most important, and profit is only the second priority, which highlights the importance of stop loss. Establishing a reasonable stop loss principle is quite effective. The core of the prudent stop loss principle is to prevent losses from continuously expanding. In addition, after setting a stop loss, execution is also a very critical part. In fact, there are many examples of investors setting a stop loss but not executing it. In the market, the tragedy of being swept out is happening almost every day.
In fact, stop loss does not mean that no loss will occur, and it does not mean that you can sit back and relax with a stop loss. Just like a safety belt on a car to prevent a car accident, a stop loss is at best “only” part of a complete trading strategy. Although there is a stop loss, you must enter the market with caution, otherwise you may face the embarrassment of “continuous stop loss”. Traders pay stop loss money to prevent greater losses. If the stop loss is improper, and you lose more money, it is not a healthy stop loss. Stop loss is not a gold medal free of death.