The importance of stop orders cannot be overstated As W.D. Gann wrote in the 1930s, if you dont use a stop loss, the question What is forex rebate not if you will go broke, cashback forex when. This is because the market is highly sensitive to external shocks bestforexrebate can cost you hundreds of pips in an hour. It seems unimaginable but without a black swan event, you can suffer catastrophic losses Forex leverage can extend losses In the Forex market, prices do not move in a straight line Even strong trends have multiple pullbacks Whatisforexrebate you never know when the pullback will start, whether it will be a small pullback or a complete reversal Can you tell if the chart below is a small pullback? It looks like a pullback. Now look at this chart. It was a small pullback, then a complete reversal: it no longer looks like a small pullback. Clearly, it is better to exit early in a downtrend than late in a downtrend. --You can place a sell order stop for a long position, or a buy order stop for a short position. Either way, a stop loss is an exit from a position that has started to turn into a loss. After interviewing traders who had to exit the market, the answer always boiled down to "more losses than profits" You may think that you will watch the price soar and exit when the price turns negative - a psychological stop - but in reality, it is very difficult to exit at a psychological stop. In your imagination, in a few minutes, the price will return to the original trend, which is called the "everything will be fine" excuse or you know exactly what caused your position to reverse. Both situations may seem like rational thinking, but they are really just excuses to let your emotions control your trading. Another reason why some traders refuse to take stops is that traders will know your stops and hunt them down. But he went bankrupt twice precisely because he did not use stops and experienced sudden and catastrophic losses. There is no doubt that brokers and others hunt for stops in order to force you out of the market so that they can later buy at a lower price or sell at a higher price, but in reality, no one needs to know your exact stop level (except perhaps particularly profit-oriented brokers) Stops are set at a limited number of reasonable technical levels, including support and resistance lines, Bollinger Bands and Fibonacci lines that anyone with a chart can see Stop orders should be gathered where they are rejected because someone else might guess what you are doing, this is a practice of hurting yourself out of anger Any given situation where the market decides to hunt a long or short position, the smart strategy is to leave the market The main reason for using stop orders is to achieve the needs of a rational trading plan In a good trading plan, you already know in advance the possible gain/loss ratio Dont forexrebatenetworkend every last penny, because the market will always have surprises from time to time, but there is some accuracy e.g. for every $1 loss, you want to make $2. The only way to achieve this goal is to have most of your real trades reach realistic profit targets and a stop-loss system that limits losses to less than 50% of gains Over time, such a plan will steadily build capital Disadvantages of stop-loss operations do There are certain disadvantages First, unexpected events can occur that can cause gaps or large swings so that your stop order is not completed at the level you specified, but is executed at a much lower level Later, when you exit with a stop loss, the price reverses and returns to its previous trajectory - but you have already exited This is certainly embarrassing and annoying, but You have to accept this fact of active trading complaining about temporary shocks that make you stop out is like complaining about a house catching fire and not burning to a level greater than the deductible Another disadvantage is that price retracements can make you stop out frequently This is not a problem with the instrument, but with the operator Frequent stops mean that you set the wrong stop level, trade in the wrong currency pair, or trade in the wrong time period If the one-hour cycle If your stop loss level is 15 pips in an hourly cycle, but the average range of highs and lows over many hours (and over many days) is 30 pips, then you are running the risk of improper stop losses. s road is on fire, or the power goes out? In an emergency, your stop-loss level may not be in the first place.