The rewards of Forex trading are so attractive that even the most inexperienced investors are looking to dive in headfirst. Some do fine in the beginning until a trade suddenly moves against them. This is a common occurrence in Forex trading as certain pairs can move more than 100 points within minutes. This might result in the significant loss of capital; ultimately a move that could easily cripple new traders entirely. These people are likely to become discouraged and never dabble in Forex trading again.
A thorough stop loss strategy makes all the difference in whether you make or lose money. For instance, lets say you have targeted 50 points per trade but also have a stop loss of 50 points. In this scenario, you may find that a tighter strategy of 25 points will keep you from losing big and eventually increase overall profits. Some suggest allowing your winning trades to run for as long as they possibly can. This gives you a great way to leverage by profiting or at least leveling out with a free trade.
There are many stop loss strategies that you can employ. Learning them is essential if you wish to be a success.
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