What is a Stop Loss? | Limit and Order explainedBy doing so, the trader/investor limits his losses or secures his profits. The stop loss order can be drawn in the negative and positive range. There are several possibilities for the Stop Loss Order, which we will explain in the following texts. The stop loss (link Wikipedia) can be entered before the order opening or after it. In general, a trader can set a stop loss for almost any financial product and thus limit his risk. The position is then automatically closed at a loss. This has the advantage that the trader does not have to constantly monitor the market. The trade is partially automated. Secure profits with the Stop LossIn addition to the take profit, the stop loss is also a good way to hedge profits in the market. As an example, imagine you are already 500€ in profit with your trade. Now you want to hedge 300€ of the position. It is now possible to set the stop loss at the certain price and hedge the order at 300€ profit. If the market touches your limit, the trade will be closed with 300€ profit. Risk management: Where should I set a stop loss?There is no single answer to this question. It is up to the trader to decide where to set the stop loss. In general, the following factors apply to a stop loss: Type of risk management Professionals recommend a sensible risk management with a risk of 1 - 5% per position from the total account. This way you can sufficiently diversify your portfolio and can cope with several losing trades in a row. Why the stop loss is the most important tool of a traderWhen trading on the Singapore Exness, you should definitely use a stop loss. It is for your own safety. As a human being, you cannot watch the prices 24 hours a day. Especially in long-term trading, a stop loss is useful. Thus, you secure your position and protect your account balance from large losses. In addition, there is a margin call on some financial products. The trading account can get into the negative balance. However, the broker should usually stop you before this happens (margin call). However, a stop loss protects you twice and gives meaning to your trading strategy. Protects your account from huge losses Tips & Tricks for setting Stop LossFirst, the trader should know where I would like to end my order in the loss. For example, there are certain marks in the chart or financial levels. The setting of your stop loss should be adapted to the trading strategy. From my experience I know 2 methods in the market, which are helpful for an intelligent stop loss tightening:
As an experienced trader, I know exactly how difficult it is to make profits consistently. I have done many tests with the stop loss and have always come to one conclusion: "Don't get carried away with a trading idea. Do not have any expectations of the trade. But secure the profit constantly with a stop loss. You have to trade ice cold and see the profits. "Hoping" will not get you further in the market. Often the trader has too high goals that are not achieved."
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