Foreign exchange is a global fair trading market as well as a risk investment market. Based on this market, even if transactions in all aspects are smooth, losses will still occur for some reasons. Therefore, in order to reduce the risk of loss, trading Stop loss is very necessary.
As foreign exchange investors, we are faced with a huge capital market that is not transferred by our will. The ups and downs in the foreign exchange trading market not only have huge potential for profit, but also risk that you will lose your money. What needs to be clear is that there are always opportunities in this market, but once you lose your money, you will lose the ability to find opportunities again. Therefore, in order to avoid risks, setting stop losses is not only necessary, but also very important.
When your funds are large enough, you can not set a stop loss, trade in small positions, and long-term holding will always make a profit. But if you trade heavily and see that the obvious trend deviates from the direction of your order, if the loss is not stopped, the result will be a liquidation!
How much is the appropriate stop loss position for foreign exchange speculation?
There are several factors to consider when setting the stop loss point. The first is the trend of trading prices. For example, in long trading, it should be set at a point where “if the price breaks through this point, the trading momentum will be reversed”. A little breakthrough, the trading signal has changed. Second is the risk-reward ratio. For example, if your risk-reward ratio is 1:2, you are willing to take a risk of 1 dollar in order to earn 2 dollars, then your stop loss point can be placed at the potential target position, for example, your transaction can have 200 points of profit , You can put the stop loss point at 100 points.
Well-known broker Depu Capital found that many investors pay more attention to the risk-reward ratio and ignore the momentum of the transaction. Therefore, carefully consider the percentage of risk that can be taken in each transaction, and then reduce or increase the number of transactions to ensure that the The risk is controlled within the acceptable range.
In actual operation, investors can set four types of stop loss orders, such as stop loss based on the percentage of the account, stop loss based on price fluctuations, such as setting Bollinger Bands and the average true fluctuation range. Based on the icon stop loss, and based on the time stop loss, these methods must consider these factors.
Generally, when setting a stop loss order, it is often committed, for example, that the stop loss is too narrow, resulting in excessive price fluctuations and leaving the market and missing the market. The stop loss is too wide, resulting in huge losses. Generally speaking, these two mistakes are not considering the market price trend and their own investment report ratio.