The importance of a Stop loss

All good methodologies use stops. A protective stop loss is an order to
exit a long or short position when prices move against you to specified

The stop loss insures against a usually large loss and has to be used in
one way or another.

An initial stop loss can be placed with your order on the trading
platform; the trade will be closed, automatically when if the stop loss
is hit.

This type of stop loss will allow you to execute your trade and go spend
time with your family or friends, this will help you to trade out of your
emotion, because you know how much money you will lose if the
market didn’t go in your direction.

Lot of traders use mental stops, when they enter a trade, they don’t
place a stop loss, because they think that the broker will hit their stop
loss which is not true.

The reason behind using mental stop is the human psychology,
humans hate to lose money. And if you don’t accept losing money as
a part of the game, you will never make money in the market.

Don’t never think of using mental stops, because you can’t control the
market, you can’t be sure that the market will do this or that.

Before you enter a trade, calculate how much you may win, and how
much you may lose. Place your stop loss order. And your profit target.
And forget about your trade.

Don’t ever risk money that you can’t afford to lose

I got lot of questions from traders asking me about how much money
they need to start trading. First of all, you have to take trading as a
business. You can make money in this business and you can lose it as

The amount of money that you need to start trading depends on the
amount of money that you can afford to lose. Don’t ever borrow
money or risk big amounts of money that you can’t afford to lose.

Because trading is all about emotions, if you trade and you are afraid
to lose your trading account, you will fail in this business. Because you
will be controlled by your emotion, and this will affect your trading

You will not be able to follow your trading strategy, and you will
certainly fail.

The best thing to do is to start small, try to get as much experience as
you can, and build slowly your trading account. This is how successful
traders become successful.

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