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painofhell
  • Posts: 1381
  • Joined: 25/09/2016
Before we talk about the reasons why you should consider using stop loss orders, it is important to understand what stop loss orders really are. Stop loss is basically an order that you place with your broker. If you have a security that you want to make a profit on, the stop loss order will give power to the broker to sell the security as soon as it reaches a defined price. Many forex traders use stop loss orders in order to maximize their profits.

Basically, the purpose of a stop loss order is to minimize the loss incurred by the investor on a particular security. Even though it is mainly used by investors for long positions, stop loss orders can also be executed in short positions. Most people think that professional forex traders should not use stop loss orders. However, here are a few reasons why you should seriously consider using stop loss orders while dealing with your broker:

Safety
When you invest money in any type of business, your main aim is to preserve your capital and generate a profit on top of it, but keeping your investment safe can be difficult due to the volatile nature of the forex market. As the name suggests, stop loss orders are designed to stop your losses. In case the value of a currency falls lower than the loss you can stomach, your broker will automatically sell it at the defined prices, thus saving your initial investment.

Convenience
Another reason why you should consider using stop loss orders is because they are relatively more convenient. Most people often trade on the foreign exchange market when they have free time on their hands. Nobody continues to trade all the time. Needless to say, you won’t be monitoring the activity on the market at all times. What if the value of a currency falls considerably in the past few hours? You will suddenly incur a huge loss.

Rather than throwing away money like that, placing a stop loss order will secure your position and make it easy for you to save your initial investment. This is a particularly good option for people who are going on a vacation and wish to stop trading for a while. If you are stuck in a situation that prevents you from watching the market for an extended period of time, you should definitely consider placing stop loss orders.

There are plenty of traders who have mixed opinions about stop loss orders. Some believe that this tactic is only used by amateur traders who do not have an understanding of the market. Some traders believe that stop loss orders should only be placed at specific levels. Either way, stop loss orders are a great option for people who want to minimize their losses and wish to generate some serious cash in the market.
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Tyson Gordon
  • Posts: 10
  • Joined: 16/09/2017
Stop loss instructs us to close a trade when we are running at loss. It is for the most part utilized by traders who are not willing to close a trade at any given moment. It shield us from losing more than we can remain to lose. Novices makes utilization of it since the trade is particular to them and in light of the way that they don't value the market or couldn't make use of the analysis. I by and large use stop loss for my trading. I truly take after set and neglect system. For my trading I like Jmfinancial.Eu, a regulated and certifiable broker. It gives ultra low spreads of 0.0 spreads. The base deposit of the broker is 100$.
Elena Watt
  • Posts: 136
  • Joined: 23/04/2020
Stop-losses prevent large and uncontrollable losses in volatile trades. If you're not using stop-losses, it's only a matter of time when a large losing position will get out of control and wipe out most of your trading profits, eventually even your entire account!
Prince Sajir
  • Posts: 44
  • Joined: 25/01/2022
Advantages of using stop-loss orders -

1. The biggest benefit of using a stop-loss order is that the traders don’t have to monitor on a regular basis how well your stock is performing. This is especially convenient when you are on a tour or in a situation where you could not monitor your position for a longer period of time.

2. It helps traders to control their small losses to become a destructive large ones. It offers protection from excessive loss.

3. An investor can control their risk-bearing level by using stop-loss orders. It manages the losses of the traders in the market by allowing them to decide what amount they are actually willing to risk.

4. One of the main advantages of using stop-loss order is their ability to “save a trader from negative balance” it prevents a trader's account from going into minus.

5. Stop loss protects an investor from sudden mental shock. it also provides emotional support to the traders when the market situations go negative.
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