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General Forex Discussion
Stop loss, good or bad?
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[QUOTE="Meindert, post: 135973, member: 42755"] "It looks like you are still in favor of using the stop-loss. You just prefer what is called [I]mental stop-loss[/I] over the [I]hard one[/I]. Mental stop-loss is a valid method of risk management, which could even be the only viable option for scalping, but it also requires a lot of discipline and market knowledge to apply. For the mental stop-loss is easily manipulated by our own emotions and biases, leading to a [I]de facto[/I] trading without stop-loss, in its worst meaning - the loss is tolerated until the account hits a [URL='https://www.earnforex.com/guides/stop-out-level-vs-margin-call/']stop-out[/URL] or the large floating loss becomes an obstacle to opening new trades" Of course, with "stop loss" I only refer to automatic. I fully agree that mental stop loss is dangerous because emotions can be involved. But I learned the hard way to do a stop loss. (This may sound strange, but actually "stop loss" does not only involve trading, the principle of stop loss can save you a lot of damage in life itself. ) I agree that market knowledge is very important, but also KISS principle. If as a scalper you open a trade, and for some reason the trend goes the other way. At 1,5 risk level I simply break of the trade. This may sound strange, but how long will it wait and keep hoping the trade will turn out fine? I said to myself, I'm a daytraders, I don't want to hold positions long. I do not hope for big profits per trade. My KISS principle is very simple, patience, hard work, be content with small things. I'm always reminded at the Dutch proverb "Who doesn't honor the small things is not worth the big things". Am I holy, no. But time after time I experience that breaking these principles Leeds to indeed a bad stop loss regime. Taking to big risks per trade. In the end loosing big time. So, yes you should always have a strategy for limiting your losses, stay disciplined, stick with it!!!! That's even more important then strategies to make profit!!! So what I'm referring to is not a total ignoring doing stop loss, but only if you let a machine do it. And I fully agree that saying so you should be so aware of the emotional factor during trading! [/QUOTE]
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