Activating the stop loss is the most important defensive barrier to preserve your capital and avoid potential losses...and determining this point depends on several factors.
1_ Determine the currency trend line (general trend - sub-trend - secondary trend) in order to know the trend when entering the deal.
There are two types:
1_ Entering the deal with the trend (considered the best when trading)
2_ Entering a trade against the trend (stop loss must be activated)
2_ Determine the price range in which the currency moves during a specific period of time (1 hour - 4 hours - 1 day...etc.)
By analyzing the currency to know (lowest price - highest price)
There are two types of stop loss:
1_Fixed stop loss:
It is that you place your stop loss in a fixed area, usually lower than the entry price.
2_Moving stop loss:
1_You place the stop loss lower than the entry price at the beginning, or you wait a little while when the price rises, then you place the stop loss higher than the entry price as a start.
2_ When the price continues to rise, you change the stop loss point and raise it to a higher price and book the profits achieved up to this moment...
You repeat the stop loss change as the price continues to rise.
Important note:
You must know the amount of price fluctuation during the rise to determine where to place the stop loss when it rises to a higher price so that it is not broken.
Conclusion:
1_ Determine the direction well (it is preferable to trade with the upward trend)
2_ Determine the price range of the currency
3_ Stop loss is the first and last line of defense to preserve your capital.
4_ Use stop loss to reserve the profits achieved and not lose them.
5_ It is better to lose part of the profits than to lose your capital.
6_ Exit the deal with the least possible loss and look for a new opportunity from below and buy at a lower price and quickly compensate for the loss and return again.
5_ Deal with your portfolio with great care and consider it your company’s private fund by setting controls and limits for the loss that you accept, provided that it does not exceed 1% of your capital at most...
6_ Not accepting or allowing a decrease in capital... Exit the current deal and look for another opportunity... It is better than believing that the currency will rise.
7_Make your goal:
1_ Preserving capital.
2_Making profits
3_Avoid losses as much as possible.. Losing part of the profit is better than losing part of the capital.
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