Forex trade has bad days and good days. If you would wish to stay in the game for a very long time, you have to consider being disciplined, strong, and resilient. You should never let a single day ruin all your hard work. You will indeed have a day when everything seems to go wrong but that should not be reason enough for you to give up. Successful forex traders know how to handle such days very well. They also know when to trade and when to quit. They stick to the plan that they make and when everything seems not to be working out, they give it a try some other day. It is because of those bad days that you will be needing a stop loss. With a stop loss, you can simply preserve your capital especially when things are not going on well.
What is a stop-loss?
A stop loss is simply the amount of money that you can afford to lose in a trade or a day before you decide to give forex trading a break. It is what guides you and what regulates your trading. You should not confuse a daily stop-loss with a daily stop-loss order. The two are very different things. A stop-loss order controls the risk on a trade. A daily stop-loss is what will make you realize that you are dealing with a day that isn’t right for you. Through the stop-loss, you will be able to preserve your capital for some other time and day when things are best suited for you. Once you start losing, it can be very difficult for you to stay focused and if you are not very careful, you will get into revenge trading mode. Once you get there, it can be very difficult for you to come back to your feet. A stop-loss is what will stop you from trading or gambling with your hard-earned capital. Learn more about stop-loss through forex brokers with zar accounts
Coming up with a daily stop loss
It is very important to consider setting up a daily stop-loss to avoid losing all the capital that you have. You should consider setting it every day and make sure that you have written it down to avoid making mistakes. If you are just getting started with trading, your daily stop loss should be based on having lost trades in a row. You can also set your day stop-loss based on loss percentage. You can use both methods as it will help you stay disciplined as well as establishing a baseline. If you have been in forex trade for a very long time, that means you have a track record. Traders with track records can use a dollar amount to set up their daily stop-loss. At the end of the day, you should only invest and lose an amount that you can afford to lose. Without a daily stop-loss, you may end up losing more money than you had anticipated and that will make you broke.