Every time you are investing in the Forex market, you're going blind in the market. You do not know to what extent the current investment trends. It may invest in the forex stock immediately before the change of trend. Smart investing means you need to protect your trading float and set a stop loss. This should be done before entering a trade, so there is no room for mistakes or last minute indecision. Stop loss is simply the advance to the point where it leaves the warehouse.
In fact, this is a line in the sand underneath the share price, saying: ". If the stock price falls below this line, then the stock has not done what I thought was going to do, and I will out of position "
It allows you to protect your investment plan for business, because it reduces losses to short, and protects all too human tendency to want to believe, you must be right.
95% of investment in entry Forex position means you expect to gain from trade. If, however, the share-investing price goes against you, you might feel the need to justify why you bought the stock ownership of it until it turns a profit. Maybe you've heard the idea that all big investing losses once started as small losses. So while the stock price continues to go wrong, losses are increasing in tandem. For this reason you must have a stop loss in place - it's like ejection seat that tells you when you finish the mission.
One of the most common questions I asked when traders are familiar with stop-loss "How big should I set my arrest?"
In other words, how much space I have to give the shares to move? There are no definitive answers to this question because it depends on what time you are investing in the event of short-term investing trader, you're going to have a stop loss which is positioned closer to the stock price. If you're investing for a long time trader, you will share the cost of a little more room to move and set a stop loss lower.
Once you have identified what period you're looking to shop, you must be able to remove the normal market noise (volatility) at that time. If you do not want to have to close the position of investment simply because the share price moved slightly because of its volatility trade.
In fact, there are some serious drawbacks setting tight stops.
First, you will reduce the reliability of the system, because it would stop more often.
Secondly, and probably a little 'more important, to dramatically increase their transaction costs, because you're trading transaction costs are an important part of their business costs.
To combat the chance, want to trade a system that does not chew through excessive brokerage commissions. This is one of the main reasons that have to manage their customers in developing a trading system that runs on something long term. With the right position and the investment risk is reduced, we are well positioned to maximize trading profits