Setting Stop Losses
Setting Your Own Stop Losses To Protect Your Forex Account
Some traders on Zulutrade would be highly tradable, but they refuse to take a small loss now and then. This causes a few run away trades to demolish their entire account right along with yours. These traders are usually trend traders that are unable to accept that the trend has either reversed or began to range. If they currency pair begins to trade in a range, these traders are usually able to get out of these trades for a small loss or even. If the trend reverses, you are in big trouble.
You can protect yourself from this type of meltdown by setting your own stops. You don't want to interfere with a successful system so you need to make sure that you give the trader room to operate. The best way to decide how and where to set stops is to look at the trader's history. The main thing you're looking for is how far they let trades generally go against them. If your signal provider cuts 90% of their trades off within 50 pips than it may be a good idea to set a 75 pip stop loss on all of their trades. This is especially important if they have just a few ~200-500 pip losers. When you're taking 20 and 30 pips off of each trade, a 500 pip loser is devistating.
Most traders have a range of where they expect the trade to go. You should be able to judge this range by looking at past trades. Don't let 1 or 2 run away trades destroy your account. While it may be true that the trade may come back and make a profit, it only takes a few (or one) to destroy your account. Remember utlimately, it is your money. You need to be responsible for it.
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