Use a Daily Stop-Loss to Protect Your Trading Income

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Why we should use “stop loss” system in trading?

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Why You Should Use a Stop-loss

▪️Most disciplined Forex traders use a stop-loss.

▪️Before opening any positions, you should know exactly where you will place your stop-loss.

▪️Once you set this up, you should never lower it to keep a position open.

▪️Keep in mind that the more transactions you make, the more you will encounter situations where you believe your losing position will become profitable.

▪️Some traders have a hard time accepting failure, which can cause them to place bigger bets, and potentially incur bigger losses.

▪️For instance, In 2020 JPMorgan Chase & Co.’s chief investment offic.

Source: Google images

A stop loss is very important for any trader or investor especially if they are new to the market.

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What is stop-loss?
Stop-loss can be defined as an advance order to sell an asset when it reaches a pre-set price point.

Why this is important?
This helps us to cut the loss.
This helps us to be free from emotions.
This helps us in less monitoring of the price.
This helps us to become a disciplined trader/investor.
This helps us prevent the quick erosion of our capital.
This helps us to stay in the market for a longer period.

Use a Daily Stop-Loss to Protect Your Trading Income

Let’s be honest, you cannot stay round the clock looking at your charts. Sooner or later you will have to step away from your screen. And at this moment the market might move against you and eat your whole capital in one transaction. How to protect yourself and your investment?

It’s simple. Always use Stop Loss. This is probably the basis of any risk management system. With the competent use of Stop Loss, you will trade with more confidence and protect your investment.

What Is Stop Loss and How to Set It

In simple words, Stop Loss is an order to automatically close your position when the market reaches a certain level. This option is intended to reduce potential losses if your trade is unsuccessful.

To set Stop Loss on an open position, follow these instructions:

  1. Right-click on your position and select “Modify or Delete Order” in the drop-down menu.
  2. In the pop-up window specify the desired Stop Loss level in pips or manually enter the desired price.
  3. Click the “Modify” button. After confirmation, you will see the Stop Loss level in the details of your position.

Where to Put the Stop Loss Level?

All traders have their own approach. Some set Stop Loss 50 or 100 pips away from the entry price. The others make their decision based on chart analysis.

In the second case, it always depends on your trading strategy:

  • Trading on pin bars – You put Stop Loss right above or below the pin bar
  • Trading on inside bars – You put Stop Loss around the maximum or minimum price of the inside or mother bar

Stop Loss Strategies

Everyone chooses the option that suits them best. Some traders even constantly monitor their trades and slowly trail Stop Loss as the market moves. This approach has the right to exist. But today we will look at three main strategies that most Forex traders use:

  1. “Hands Off” or “Set and Forget”
  2. Breakeven Strategy
  3. 50% Stop Loss

“Hands Off” or “Set and Forget”

Among all strategies, this one is the simplest and most understandable. Here you set Stop Loss according to your trading strategy and no longer move it. This method has several advantages:

  • Keeps Stop Loss at a suitable distance. Looking at the market, you might want to move the level and as a result, your trade might close too soon.
  • The strategy is easy to use. You set the level only once and you no longer have to make new calculations or do an additional market analysis.
  • It eliminates the emotional aspect. If you don’t return to your Stop Loss, you don’t make additional decisions based on your feelings

Breakeven Strategy

The most important thing for most traders is the lack of losses. They don’t even care how much they earn. The main thing is not to lose anything. So that’s where the Breakeven strategy comes from. Traders using this method wait until the market moves a few points, and then set Stop Loss exactly on the entry price. This way they can make sure that they don’t lose anything. Here are a couple of advantages to this approach:

  • You risk nothing at all
  • Even without analysis, you know where to install your Stop Loss

No risk seems very attractive. Still, if you want to make constant income on Forex, then you should focus on the profit that you can get, not the number of losses.

50% Stop Loss

This strategy is much more complicated than the others, as it requires additional analysis in the process. The essence of this method is as follows:

  • You set Stop Loss at the beginning of trading
  • After some time (usually the next day) you analyze the current market situation
  • You trail Stop Loss 50% closer if the trade moves in a favorable direction

For example, if you set Stop Loss at 100 pips from the entry price and the price is clearly moving in your favor, then you can move it by 50 pips and halve the estimated losses.

This method has several advantages as well:

  • Your potential losses will be cut in half
  • Your trading will be based on price action – and this is always the best approach
  • It still leaves 50% of the initial Stop Loss for further price fluctuations

The amount of 50% is not a guide to action. It is best to assess the market situation and move Stop Loss based on the highs and lows of the inside bars and pin bars.

Final Words

There are several ways to set Stop Loss and even more ways to trail it. In order to reveal the topic of a competent Stop Loss trailing, we’ll need a whole new article. So I will tell about this next time.

In the meanwhile, you should remember a couple of important things:

  • Using Stop Loss is a must. Otherwise, you can’t control your risks without leaving the screen and you cannot use any strategy other than scalping.
  • If the market is highly volatile, monitor your trades. During a gap, Stop Loss will not be able to protect your position, since the indicated price will not appear on the market. Be careful.

That’s all. I hope that now you understand how to protect your investment in the easiest way. Next time, I will tell you how to trail your Stop Loss thoughtfully.

Trump threatens tariffs on oil imports to ‘protect’ U.S. energy workers

By Jeff Mason and Timothy Gardner

WASHINGTON (Reuters) – U.S. President Donald Trump said on Saturday he would impose tariffs on crude imports if he has to “protect” U.S. energy workers from the oil price crash that has been exacerbated by a war between Russia and Saudi Arabia over market share.

“If I have to do tariffs on oil coming from outside or if I have to do something to protect our . tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do,” Trump told reporters in a briefing about the coronavirus outbreak.

Oil prices have dropped by about two-thirds this year as the pandemic crushes demand and as major producers Russia and Saudi Arabia boost output in a war over market share.

The United States in recent years has become the world’s biggest oil producer, at times putting its exports in competition with Russia and members of the Organization of the Petroleum Exporting Countries, or OPEC.

As oil prices drop, many heavily leveraged U.S. energy companies face bankruptcies and workers are at risk of layoffs. After meeting with industry executives on Friday, Trump said he was not considering tariffs at the moment, but it was a tool that could be used “if we’re not treated fairly.”

Two major industry groups, the American Petroleum Institute and American Fuel & Petrochemical Manufacturers, told Trump in a letter on Wednesday that tariffs on oil imports would jeopardize the domestic refining business as some plants depend on crude from abroad.

The United States imported more 1 million barrels per day of oil from Russia and Saudi Arabia combined in 2020, according to the U.S. Energy Information Administration.

Trump reiterated on Saturday that Saudi Arabia had told him it had agreed with Russia to jointly reduce output by an unprecedented 10 million barrels per day or more. The countries have not confirmed the plan, other than saying they would discuss ways to stabilize global oil markets.

OPEC and Russia have postponed a Monday meeting to discuss oil output cuts until April 9, OPEC sources said, due to a Saudi-Russia dispute over who is to blame for plunging crude prices.

When oil prices started dropping last month, Trump initially emphasized it would be good for motorists. On Saturday he said gasoline prices could fall to 90 cents a gallon and conceded that the oil price crash is “going to hurt a lot of jobs in our country.”

De facto OPEC leader Saudi Arabia and Russia would be “destroying themselves” if they do not end the price war by reducing output, Trump said, noting that “I couldn’t care less about OPEC.”

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