Forex

Think about it: what would your car look like if you took out the brakes? Hell, you
don’t need them! You can just take your foot off the gas when it’s time to slow down,
right!
People start to think that they should t ake out their stop loss because “Every time I
lose, I realize that the trade came back later and everything worked out.” Well, you know why that is? Because we were in the middle of a ranging market, where the price jumps up and down – and they get lucky. But what if the market stops ranging? What if it starts rending? In that case, if you don’t have a stop,
the trend ceases to be your friend. It becomes your worst enemy.
My first trading account was comprised of $2,000 that a friend gave me. He trusted me and he
said, “Trade it. Lose it. It’s trading money, not scared money. If you lose it, it’s not a big deal.”
He thought that by saying that, I would be more relaxed. While there is some truth to that statement
(scared money is rarely good trading money), it’s also dangerous to say. Think about it. What do you think I
did when I bought the USD/CHF and it started to fall? I thought, “The trade’s going to come back to me. It’s going to start going up again.” I also thought:
“This isn’t scared money. I’m going to stay in the trade no matter what.”
Of course, staying in the trade lost me my first account. You could already see that
one coming, as soon as I mentioned it. If you hear someone say that you don’t need a
stop loss, then you’re hearing a maniac. Do you need a stop loss order? A specific
order in your trading platform? No. If you’re worried about your broker “fishing for
stops” then you can just have a mental stop loss order. This is a point at which you, as
a disciplined trader, manually close the trade. This is harder to do than just putting
the order in your trading platform or telling your broker over the phone – but it still
works better than hiding from your losses as they grow and grow.