How to set stop losses in foreign exchange?

A failed to set a stop loss before entering the market

To set a stop loss price, you must have confirmed the stop loss price when you enter the market, rather than looking for the stop loss price when the market is not conducive to you after entering the market.

Because when you have not entered the market, it is the most objective to look at the market; and when setting a stop loss price before entering the market, you must be able to confirm it repeatedly.

The stop-loss price is of practical significance, especially when operating a short-term, the design of the stop-loss price must take into account many factors before setting it.

B Constantly changing stops

When the originally set stop loss price reaches the price, it should be actually executed.

After entering the market, it is very unwise to constantly change the stop loss.

In the case of capital permitting, after a lot of time, you may not be able to get away with it by not performing a stop loss precisely, but if you develop such a bad habit, a serious injury is enough to erode all your hard-earned profits.

The more important loss is that when you constantly change your stop loss, you lose the objective mood and opportunity to re-enter the market.

C Stop loss due to emotion or position pressure

If the stop-loss price is not well designed, it is easy to encounter a stop-loss due to warehouse pressure or fear. This means that at the beginning of entering the market, you no longer have enough chances of winning.

In the case of financial distress, if you have to execute a stop loss, then such a trade is no different from gambling, and fear forces you to execute a stop loss, usually at the wrong stop price.

D Use losses to design stop losses

This type of stop loss is probably the most erroneous concept of stop loss, and the root cause of this type of stop loss design often comes from the failure to escape the frame of the trading model.

When designing the stop-loss price, I first framed myself because of the design of the trading model, such as: I set a profit of 60 points, so the stop loss can only be 30 points, and for example: I set a stop loss of only 5% of the principal, so I can only set a stop loss of how many points;

For example, some people will set a stop loss of 30 or 50 points after entering the market when trading, but they do not carefully examine the stop loss price of 30 or 50 points, whether it is the stop loss area of the market. It is absolutely wrong to use losses to design stop losses like this.

Because the market is a cosmic chaos, and your own model is only a small part of the universe, only the market's stop loss is the correct stop loss, not yours.

Therefore, when you use loss thinking to design stop losses, you should also add leverage and price elements to design a correct and effective stop loss. To become a good trader, you should strive to find the true stop loss in the market.

E Use support and pressure to find stops

When you read this paragraph, you may be surprised why it is wrong to use support and pressure to design a stop loss.

And there are two reasons for that.

The first point is very simple, because the support and pressure you find may not be correct. As we said earlier, you must find the market's stop loss, not your own.

The second reason is that there is support after support, and there is pressure after pressure. The first support, the second support, or even the third support on the short line may be very close together, which becomes the main reason why you keep moving stops, thus expanding your trading risk.

In a larger range, it is more feasible to use support and pressure to design a stop loss, but the mistake that is easy to make is that when you can't hold back and enter the market early, a stop loss can bite off a lot of capital. The design of the stop loss needs to be closely coordinated with our trading style