There is two BIG camps of trading style. Those that use stops and those that don't.
There's good reason NOT to use stop orders, as it's a common trading tatic of BIG money, to take out your stop order, for their own profit. BIG money are are players who's money actually moves the market.
The most common strategy is to use a mental stop, which works well, if you are there watching the market and disciplined enough to follow you plan. Many don't. But of course, being glued to monitor day and night, is a stiff burden.
While you may not use them, whether you use stop orders to protect your new position against loss, or as a way of protect your existing profits, it's an essential strategy to have in your arsenal. ESPECIALLY if you want to be able to leave the monitor, or sleep nights.
If you've never done this before USE your demo account to experiment. When you place a trade, you have the option of also placing a stop and limit order. Also, if you enter a trade with a market order, you ALWAYS have the option of adding these contingency stop and limit orders, afterwards.
The nice thing about linking the stop and limit orders to your position, is that if any one is hit, then the other is canceled. ALSO if you close that position with a market order, then the stop and limit orders linked to that position are automatically canceled. Nice. Huh?
Lets use 20 pips as an example. You enter the market and take a position. You link a 20 pip stop loss and a 20 pip limit order to your position. Once this is done, you can walk away. Either one of two things can happen, depending on which way the market moves. Either you're going to make 20 pips or you're going to loose 20 pips.
Of course that's just a hypothetical example. But you get the idea. When you start trading like this, or at least learning to trade this way as an exercise, you are forcing yourself, to seek out the lowest risk entry points, which is ALWAYS a good thing to do.
The BIG upside to learning how to trade this way, is you are become MUCH less inclined to make gut decision based of the emotions of and greed.
There's good reason NOT to use stop orders, as it's a common trading tatic of BIG money, to take out your stop order, for their own profit. BIG money are are players who's money actually moves the market.
The most common strategy is to use a mental stop, which works well, if you are there watching the market and disciplined enough to follow you plan. Many don't. But of course, being glued to monitor day and night, is a stiff burden.
While you may not use them, whether you use stop orders to protect your new position against loss, or as a way of protect your existing profits, it's an essential strategy to have in your arsenal. ESPECIALLY if you want to be able to leave the monitor, or sleep nights.
If you've never done this before USE your demo account to experiment. When you place a trade, you have the option of also placing a stop and limit order. Also, if you enter a trade with a market order, you ALWAYS have the option of adding these contingency stop and limit orders, afterwards.
The nice thing about linking the stop and limit orders to your position, is that if any one is hit, then the other is canceled. ALSO if you close that position with a market order, then the stop and limit orders linked to that position are automatically canceled. Nice. Huh?
Lets use 20 pips as an example. You enter the market and take a position. You link a 20 pip stop loss and a 20 pip limit order to your position. Once this is done, you can walk away. Either one of two things can happen, depending on which way the market moves. Either you're going to make 20 pips or you're going to loose 20 pips.
Of course that's just a hypothetical example. But you get the idea. When you start trading like this, or at least learning to trade this way as an exercise, you are forcing yourself, to seek out the lowest risk entry points, which is ALWAYS a good thing to do.
The BIG upside to learning how to trade this way, is you are become MUCH less inclined to make gut decision based of the emotions of and greed.
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