No stop loss in forex trading

Why no stop loss? Why do some traders not set stop loss when trading forex? Are they… crazy? Don't jump to that conclusion!

This article will share about a very important issue in forex trading: Stop loss.

When you come across a trader who doesn't set a stop loss, there are many reasons that no one but the trader will know why they didn't set a stop loss. For example, I can guess the following scenarios:

- They are new to the forex market, and they do not know anything about stop loss, or know briefly but do not know how to set a stop loss for a trade order.

- They divide the investment into several parts, and each part is in 1 trading account, each trading account they trade with full margin when entering orders, so they don't need to set a stop loss, that's too much obvious and very reasonable.

- Their account has a very large amount of capital, the trading order is very small (compared to the total capital), they completely control the market fluctuations over each period (hours / days / weeks.. ), so they don't need to put a stop loss, because they will close the order when the price reaches the target area (if the direction is right), or when the price reaches the psychological tolerance limit (if the wrong direction).

- The capital account is very large, the order volume is extremely small compared to the account, and they trade with a long-term strategy, so placing a stop loss is sometimes not necessary if the hold period does not happen too strong (causing too large and unexpected fluctuations for the market).

- ... countless other reasons.

- Or... simply, THEY DON'T LIKE SET LOSS STOP, that's all!

So let's not rush to the conclusion when seeing a "no stop loss" trade order that the trader is crazy, because it will certainly be a very subjective assessment.

Turn the problem upside down, so why set Stop Loss? Here are the advantages of placing a stop loss - the reason most forex traders often choose it:

- Good control of trade risk: Setting a stop loss will tell you exactly how much money you will lose if you are wrong, when you set a stop loss you can sleep with a pillow, even if the market runs backwards. your account will only lose that amount, from which trading psychology will always be under control - is one of the key factors determining success in forex investment.

- Improve capital management efficiency: Thanks to the control of risk for each order, the overall capital management as well as the long-term plan is better controlled.

- Correction definitively: If you do not set a stop loss, while your trading experience and psychology are not good enough, you will be prone to psychological problems, especially when the price enters the confirmation zone wrong judgment, but you are not decisive enough to close order, instead you will be stubborn and expect the price to turn around to be able to "turn defeat into victory"... but in most cases is a BIGGER WRONG WRONG. Instead, if you have placed a stop loss, even while you are drinking coffee and chatting with friends, the price has entered the danger zone and the order has been automatically closed to preserve the remaining capital in the account your.

However, NO STOP LOSS also offers the following advantages:

- Avoid being "cheated" by the broker: Forex brokers may intentionally make the price range increase a little bit under normal trading conditions or during market opening/closing, or other public times news release, for the purpose of "hunting stop loss" of traders. That is normal ! And you don't expect to complain to them because it is warned in the terms of the agreement, when you open a trading account at the broker. So your job is to "live with it", adapt to it and treat it as part of the game. Therefore, when the order does not have a stop loss, the broker will not be able to "hunt the stop loss". This is the biggest advantage of trading NO STOP LOSS.

- Avoid shocks from the market: If you have ever traded forex, it will not be strange when there are candles at the top and bottom with long shadows (eg pinbar), placing a stop loss will cause you to lose money. close the order right there and then the price will reverse, which causes a big psychological inhibition for you. Sometimes it's a "stop loss hunt" from a forex broker, but it's also not uncommon for it to be actual market volatility, so NO STOP LOSS can easily avoid this problem.

- Psychological training: When you do not set a stop loss, you will have to be very decisive in closing the trade when the price falls into the danger zone (for example, the confirmation zone that the price will run even stronger in the opposite direction of the forecast guess, as confirmation zone of reversal if you trade with the trend). When you are ready to decisively close a losing trade, which means you get it wrong and give yourself another chance, in the next order, it will gradually bring you a stable and consistent trading psychology, and gradually remove emotions from trading. This is one of the key factors for success in forex trading.

In summary, through this article, you will have a more comprehensive view of placing a stop loss as well as its advantages and disadvantages, from which there will be ways to apply suitable for each specific condition.

Thank you for reading and sharing this article, see you in the next articles.

Best regards,

CaPhiLe.Com