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analyst75

The major reason why suicide traders don’t want to use stop loss – part 2

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TIMELY EXIT

 

 

“Successful Trading Is Not About Being Right.” – VTI

 

What is your tolerance for pain? Consider the following scenario. You have 10% of your account balance on the line. For the past two days, prices have been going in the direction you had anticipated, but today, an announcement was made that caused a market move that caused all your profits to be wiped out in an hour. What will you do? See if prices will move back to where you are okay again? At times like these, it is useful to have a clearly defined trading plan with a specific exit strategy.

 

Trading is inherently uncertain. You never know exactly what will happen next. That’s what makes the business exciting to some traders but nerve wracking to others. How you handle adverse events that make prices move against you depends on your personality. The best way to protect your capital is to use protective stops. When formulating your trading plan, you must decide how much pain you can tolerate. How much money can you lose before you have to exit the trade? You can set this exit point as a formal stop loss, you can use the automatic settings on your trading platform to set a stop, or you can use a mental stop (not recommended).

 

The problem with a formal stop loss procedure, whether it is a formal order or an automatic setting on your trading platform, is that a transitory change in price can ‘stop you out.’ if the placement of your stop loss does not adequately account for volatility. It’s hard to know how far a stock may move and a temporary drop can ruin your trading plan when a protective stop is not set properly. Mental stops may be more useful, but you run the risk of not being able to exercise your mental stop (think heart attack, nervous breakdown, stroke, personal emergency, computer failure, etc.). You can decide how far a stock price must move against you before you will liquidate the position. When prices reach the exit point, you can decide whether the low price is transitory or represents a significant change in trend. You can then exit the trade.

 

This all sounds good in theory, but depending on your personality, you may not be able to carry out this strategy. If you have trouble controlling your emotions and you use a mental stop, for example, you may have trouble closing the trade when it reaches your exit point. Some people panic and out of fear don’t close their position when their mental stop is reached. These people may need to impose the proper amount of discipline on their trading actions by using an electronic stop or a formal stop-loss order.

 

Minimizing trading losses is the hallmark of successful trading, but not all traders are equal when it comes to their ability to trade decisively under strain. If you want to trade profitably, you have to work around your personality. If you are cool headed, disciplined, and are willing to take the risk even under the most stressful conditions, you can use mental stops to protect your capital. But if you are easily shaken by choppy market action, you might want to use electronic, automatic stops to protect yourself. Whatever you do, however, minimize losses as much as possible. It’s the only way to trade profitably in the long run.

 

 

Author: Joe Ross

 

Source https://www.tradingeducators.com/edition-733 

 

The article is ended with 3 quotes below:

 

“Getting out of trades too early with tiny profits very often is a sure road to bankruptcy. Sure it feels good to take some off the table right away…but it’s hardly ever successful in the long run.” - Marco Mayer 

 

“To make money out of these still requires good management. It is always challenging to see some traders make money from a trade while some traders lose money from the very same trade.” – Joe Ross

 

“Don’t let those losses lead to mindset traps that can stop you from taking the next trade. Change the way you think about your loss, and you’ll regain your motivation. I guarantee it.” – Louise Bedford

 

www.tallinex.com wants you to make money from the markets.

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  • Topics

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    •   Date : 21st February 2019.

      MACRO EVENTS & NEWS OF 21st February 2019.



      FX News Today Asian equities initially rallied after Fed minutes promised patience on further policy action but most have moved down from earlier highs. Hopes that the US and China are nearing a deal on trade have risen after an unnamed source cited by Reuters said the two sides have started to outline commitments in principle in what is described as the most significant progress yet. The JPY225 closed with a gain of just 0.15%, while the Topix was unchanged from yesterday. The Hang Seng is up 0.03% and mainland China indices are also little changed. The AUS200 outperformed and rallied 0.70%, after better than expected jobs data. US futures are stronger after Reuters reports outlined progress in US-Sino trade talks and European futures are also moving higher. The March WTI futures are trading at USD 57.33 per barrel. Charts of the Day


      Main Macro Events Today EU PMIs – EU Manufacturing PMI is expected to have declined to 50.3 in February, compared to 50.5 last month, dangerously close to the 50 threshold. Services PMI is expected to have increased to 51.4, compared to 51.2 in January, hence pushing the overall Composite PMI higher to 51.1, compared to 51.0 in the previous month. Philly Fed Index – The Philly Fed Manufacturing Index is expected to have declined to 14, compared to 17 in January, still registering a positive effect. Durable Goods – Durable goods are expected to come out registering positive growth for December, compared to negative for November. US PMIs – Manufacturing is expected to have declined in the US, similar to the EU, reaching 54.7 compared to 54.9 last month, while Services are expected to have slightly grown to 54.3 compared to 54.2 in January. Existing Home Sales – Home Sales are expected to have remained at more or less the same levels, at 5M, compared to 4.99M last month. CB Leading Index – The Conference Board Index is expected to have shown a 0.1% m/m increase in January, compared to the 0.1% m/m contraction in December. Support and Resistance
       
      Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

      Please note that times displayed based on local time zone and are from time of writing this report.

      Click HERE to access the full HotForex Economic calendar.

      Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

      Click HERE to READ more Market news.

      Andria Pichidi
      Market Analyst
      HotForex

      Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • hello everyone, lets all have a good 2019  best of luck to all.a good start so far. and hoping for more good news in the future
    • Ethereum (ETH) Daily Price Forecast – February 20 ETH/USD Medium-term Trend: Bullish ·         Resistance Levels: $240, $250, $260 ·         Support Levels: $140, $130, $120 Yesterday, February 19, the price of Ethereum was in a bullish trend. The crypto’s price was trading at $151.68 when the crypto was resisted. The crypto was resisted at the $150 price level and the price fell to the support of the 12-day EMA. The bullish trend has been terminated but the ETH price is trading at  $145.76 as at the time of writing. On the upside, the crypto’s price will rise if crypto’s price is sustained above the EMAs while the bulls break the $150 price level. Meanwhile, the MACD line and the signal line are above the zero line which indicates a buy signal. Also, the crypto’s price is above the 12-day EMA and the 26-day EMA which indicates that price is likely to rise. ETH/USD Short-term Trend: Bullish On the 1-hour chart, the crypto's price is in a bullish trend zone. The previous bullish trend has been terminated as price made a downward fall. The ETH price has fallen to the support of the $140 price level and the bulls are expected to defend the support level. On the downside, if the bears break the $140 price level, the crypto will further depreciate.
      Meanwhile, the MACD line and the signal are above the zero line which indicates a buy signal. Also, the crypto’s price is below the EMAs which indicate that price is likely to fall.     The views and opinions expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.                                                                                                                 Top of Form                             Source: www.bitcoinexchangeguide.com
    •   Date : 20th February 2019.

      MACRO EVENTS & NEWS OF 20th February 2019.



      FX News Today Bund yields lower in opening trade, Equity markets mostly higher in Asia. Stock markets in Asia remained underpinned by hopes of a US-Sino trade deal. Wall Street closed higher, helped by positive earnings at Walmart Inc. Fresh. President Trump meanwhile suggested that March 1 tariff deadline is not cast in stone, so there is hope that further tariffs can be avoided. Japan’s exports fell 8.4% in January, while imports declined 0.6% y/y. The contraction in exports seems consistent with escalating concern that Japan’s export sector will be dented this year by global trade frictions and the slowing in China’s economy. The Yuan lifted after a Bloomberg report saying the US was looking for a pledge from China that it will not devalue its yuan currency as part of the trade deal. USDJPY has climbed to 110.91 from 110.60, amid cautious risk-on theme WTI crude edged out fresh 3-month high of $56.77. Charts of the Day


      Main Macro Events Today Juncker and May meet for another round of crunch talks in Brussels today. EU Consumer Confidence – The overall Eurozone number Consumer Price Index (M/M) on course to be confirmed at 1.4% y/y. FOMC minutes – The focus turns on the FOMC minutes to the January 29, 30 policy meeting as we look to glean more information on the Fed’s pivot to a more dovish point of view, even as rates were left unchanged. We did get a glimpse from Chairman Powell’s press conference, where he noted tighter financial conditions, along with tame inflation. And he said the onus is on price pressures to force a rate move. Australian labour data – The unemployment rate is seen holding steady at 5.0%. Support and Resistance

      Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

      Please note that times displayed based on local time zone and are from time of writing this report.

      Click HERE to access the full HotForex Economic calendar.

      Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

      Click HERE to READ more Market news.

      Andria Pichidi
      Market Analyst
      HotForex

      Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Forex trading is a genuine business and in that capacity ought to be moved toward like one. Obviously there are a chosen few traders who begun without a FX training and have turned out to be fruitful .
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