Forex Trading Without Stop Loss Order
Stop loss is one of the most key orders which a foreign currency trader usually places, however, surprisingly large number of forex traders simply ignore the stop loss order.
This potential order helps from not incurring too heavy losses should the market move against you. Hence, many traders ignore this specifically designed tool to protect them, and the answer is EMOTION.
If you ask most of the traders in the forex trading market of why they don't often use stop loss orders, they will tell you one of their greatest fears which is often, despite the fact that the trade is moving against them, their gut feeling tells them that it is basically a minimal loss and will reverse in their favour. They believe if they had a stop loss order on the trade, there is a danger that their position would automatically be closed out before the market had an opportunity to reverse.
Undoubtedly, there would be occasions that the market would reverse, though it doesn't often. If you are away from your trading platform or trading floor and don't have a stop loss order in place, you will be emotionally distressed and will become much more eager to know whether your trade is profitable or has incurred further more losses, which creates a worrisome situation for the trader.
In the end case the trader can see the market is moving against him and that his trade is moving in to the loss but he awaits and continues to presume the market would turn to his favour any moment and keeps on holding to his trade. However, the small loss turns in to a fairly big loss, and further tackles his emotions, not only believes a reversal would occur but also worries on covering his large loss. He might incur a margin call, and invariably would forcefully need to close the position and would admit he have made a mistake, where a small loss has turn in to a fairly big one.
Even the most experienced currency traders not always have a profitable trade on every position taken, which is part of the trading life. To become a successful trader one has to minimize the size of losing trade by placing the stop loss order on all the trades to protect from any large losses and stop the heart in controlling the mind.
This potential order helps from not incurring too heavy losses should the market move against you. Hence, many traders ignore this specifically designed tool to protect them, and the answer is EMOTION.
If you ask most of the traders in the forex trading market of why they don't often use stop loss orders, they will tell you one of their greatest fears which is often, despite the fact that the trade is moving against them, their gut feeling tells them that it is basically a minimal loss and will reverse in their favour. They believe if they had a stop loss order on the trade, there is a danger that their position would automatically be closed out before the market had an opportunity to reverse.
Undoubtedly, there would be occasions that the market would reverse, though it doesn't often. If you are away from your trading platform or trading floor and don't have a stop loss order in place, you will be emotionally distressed and will become much more eager to know whether your trade is profitable or has incurred further more losses, which creates a worrisome situation for the trader.
In the end case the trader can see the market is moving against him and that his trade is moving in to the loss but he awaits and continues to presume the market would turn to his favour any moment and keeps on holding to his trade. However, the small loss turns in to a fairly big loss, and further tackles his emotions, not only believes a reversal would occur but also worries on covering his large loss. He might incur a margin call, and invariably would forcefully need to close the position and would admit he have made a mistake, where a small loss has turn in to a fairly big one.
Even the most experienced currency traders not always have a profitable trade on every position taken, which is part of the trading life. To become a successful trader one has to minimize the size of losing trade by placing the stop loss order on all the trades to protect from any large losses and stop the heart in controlling the mind.
