Stop Losses in Forex Trading

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Presentation Description

This is a very popular strategy in Forex and most of the traders set Stop-loss to save their capital. This presentation going to tell you some ideas of stop losses in forex trading.

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Presentation Transcript

Stop Losses in Forex Trading:

Stop Losses in Forex Trading

Index:

Index Stop Losses in Forex Trading Types of Stop-loss

Stop Losses in Forex Trading:

Stop Losses in Forex Trading The Stop Losses function is a valuable tool to safeguard the value of foreign currency trades . It is especially true when the price of the forex pair starts to move into negative territory. You simply set the stop-loss level, which determines the most you can lose on position if the price moves against you.

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You should bear in mind that the stop-losses can work for you or against you in the online trading . While they protect against sudden movements in the price, they can result in fear based trading which is equally detrimental.

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If you decide to maintain the narrow stop-losses and collect on winning trades too early, this will result in the incremental wins and losses. And there will be a loss of overall trading activity.

Types of Stop-Loss:

Types of Stop-Loss If you are wondering how stop-loss can help you while you are trading, it is a good idea to understand the several different stop-loss tools and techniques. 1. Average True Range This stop-loss technique is used in many charting packages, and it factors volatility into the price of tradable instruments.

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2. Trailing Stop It is possible to secure your profit while limiting your risk, by using a trailing stop. It is a special type of stop-loss adjusts your stop level automatically when your position runs into profit, to lock in your gains.

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As the price of the tradable instrument rises, so too does the stop-loss. But when the price falls beyond the stop levels your position is closed automatically as with a normal stop loss.

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3. Guaranteed Stops This stop-loss allows you to limit the risk on trades even when market gaps occur. A Guaranteed Stop always represents the maximum that you can lose on a position, and there is a small premium for the absolute risk protection.

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