Jayden In forex trading, loss-making orders are formed for no other reason than the following.
(1) Misjudging the trend, which in layman’s terms means looking in the wrong direction. Instead of going in the direction you expected, the market pounces directly on your stop-loss position after entering the market.
(2) The stop-loss position is not reasonable and is too arbitrary, not following all objective requirements. The exchange rate did not go directly as expected, but first killed a “backward” and then turned back towards the take profit, but this “backward” triggered the stop-loss order.
(3) The specific entry position is not appropriate. Entry belongs to counter-trend the market, or with the trend but did not take measures to avoid short-term rush too fast when the market through go space is too large, the stop loss was forced to put a large, hoping that the market does not rebound or small rebound, when it is not as expected, it can’t avoid stopping early in the case of excessive psychological pressure.
(4) Placing stop orders that are too far away, not based on objective volatility laws, not taking into account the vast majority of cases, wishful thinking in the pursuit of “home runs”, but the exchange rate for various reasons does not reach the expected take profit position then turn back and reverse to lunge the stop loss or hanging in mid.
So, do we have any solutions? Of course, see the solutions we have for you below.
(1) One-sided market, follow the trend, important resistance or support when cautiously engaged; When the volatility is in the range, simply close the market, or place a pending order at the upper and lower breakthrough levels.
(2) Set the stop-loss position, need to have a technical basis, or the previous high or trend line, and according to the market and then leave a margin of 5 ~ 30 pips ranging from normal single, a sided market can be fewer pips, rushed single-sided market and the oscillating market should add more.
To balance the operating psychology, compound stops can be used when judging hesitation, with some positions added and some positions not. It is best to use a trailing stop to protect profits and increase the possibilities of making a profit.
(3) Never force your way into the market if the exchange rate is unsuitable. Predict the breakout point and enter the market in an ambush with reference to the breakout point. Breakout point prediction can be made by observing the short-term candlesticks and identifying where key resistance or support is located, which can be done with the help of the pivot point system.
(4) Set the take profit level to have a technical basis, or the previous high or trend line, and according to the market and then leave a margin ranging from 5 to 30 pips, a normal single-sided market can be left less, rushed single-sided market and the oscillating market should be added more.
To balance the operating psychology, a compound take profit can be used when judging hesitation, with some positions being profited out first. It is best to use a trailing take profit, which is actually a trailing entry stop.
The actual trading should be the predicted time when the take profit is reached, and the conditions of the turn of the trend, one of the two satisfies the condition, one has met but not profitable, should reconsider the market plate, treated as the trading is completed under a new single, re-structured stop loss and take profit position, or you can even consider closing the orders out first.
In fact, in all success in business and success in life, the right concept is primary. So, forex trading won’t make money because you don’t do the right trend, and forex trading will lose money because you don’t stop loss.
As experienced traders, we believe that one of the best trading tools is stop-loss. You have to separate your emotional reaction, your pride from your trading behaviour at the stop-loss point and admit your mistake with a straight face. Most people have considerable difficulty in doing this, and often instead of selling the losing side, they just wait and hope that the market will understand that it was wrong and reverse back to the way they think it “should have been”.
This attitude usually has self-destructive consequences, because as Joe Granville, the inventor of Gram’s Eight Method of Averaging, once said, “The market doesn’t know whether you’re long or short, it doesn’t care.” You are the only one who will mix emotional reactions to your positions. Current market movements are nothing more than a mere reflection of the relative movement of supply and demand. If you cheer for the direction of the market, there is bound to be someone who cheers when the market moves against you.
Accepting a loss is a very difficult thing to do, because stopping a loss is more than just admitting that you have made a mistake. But in the financial markets, mistakes are inevitable and bound to happen. With every trade, it is important to set up a “stop-loss”, or “tipping point”. As soon as this level is reached, you will stop and out of the market, and you must have the discipline to actually execute a stop loss when this point is reached.
Stop losses can be executed in two ways: by placing a stop-loss order with your forex broker at a limited price, or by setting a price level in your own mind and executing a market stop as soon as the price level is reached, no matter what happens.
Whichever method you use, a stop loss is a self-protective investment because as long as you are wrong about the market, a stop loss will save you from suffering serious losses, by closing your losing positions, and keep you from falling into a bottomless hole that could get deeper and deeper, and moreover preserve the strength to get back on your feet.
A stop-loss automatically pulls your head out of negative thinking and back into neutral thinking. Although your money will not return to where it was after a stop loss, your mind will be able to return to the organization and generate new ideas, and you will no longer be stagnant because of the loss.
The more you lose on a trade, the more subjective you will become. Getting out of a losing trade in good time clears your head and allows your objectivity to be rebuilt. After a moment’s respite, if you can objectively and rationally prove that the original idea still works, you may be able to re-establish the same parts, but always remind yourself that there are plenty of opportunities in the market. By stopping your losses, your trading capital is thus protected and you gain the right to participate in the next highly profitable, low-risk trading opportunity.
