Stop loss is your best friend
I’ve said it before & will say it again: a successful trading career is built around managing your risk, If you don’t take the proper precautions and don’t plan your trades entry and exits you will quickly find yourself in a situations that you’re unable to manage or escape from.
One of the most basic tools that you can guard your account and trades with is setting a stop-loss.
What is a stop loss?
It’s the net that catches your trade before it falls and hits the ground, When you take a trade you expect it to go your way as you planned, but that’s not the case every time, When a trade goes against you, you cant let it run and ruin your account or portfolio, you’ll need to cut it and move on.
In other words stop loss is a preset place where an exit will occur if a price hits a certain number that shows your analysis was wrong for that trade, It helps you limit your emotions and keep your ego in check. Traders that are driven by their emotions tend to make irrational and extreme choices that very often lead to financial loss.
As part of your trading plan, stop losses help you remove the emotional side of things. No matter what happens or how good or bad you feel about a trade, a stop loss is mechanical and independent, and no matter what you try to tell yourself regarding a price, the stop loss will keep you in check and make sure your actions are driven by a logical plan, not an emotional response.
If you are like most traders that trade several orders in the market at the same time, The problem is that the market could move fast against you, and you must know how to react quickly, or be in front of the screen most of the time.
The best way to manage several orders at the same time is by adding a stop loss order, so if the market went against you; you will be stopped out automatically.
This way you can be calm and in control of managing several orders at the same time without suffering a big loss.
I know some people like trading without a stop loss, especially when they manage their account and not managing for others, Do you have a horros trading story for Halloween? So, what is your story?
