Forex Trading - Should I Use Stop Losses?

By: Kelvin Chan

This little article is addressed for those who don't like using stop losses in their trading (especially with forex trading). But read on anyway even if you've been faithfully using stops. It will be good ... trust me.

In all my time of trading, I can safely tell you one thing. And that is the biggest and worst losses I've ever experienced all came not from bad setups or reading the charts wrongly. The market can be forgiving towards those mistakes. All except for one.

The mistake of deciding not to use stops. I can remember it some years ago when I literally lost hundreds and hundreds of pips foolishly only because I refused to use a stop.

For many traders, they have this strategy where they would go for a small amount of profit each time but are willing to risk a huge chunk of their capital just to catch this small profit. Haven't we been taught to maximize our gains and minimize our losses? Why are there still traders who think they can succeed going against this practice is quite beyond me.

Granted, there are some super successful traders that we hear about that don't use stops but they come far and few between. That's a fact. Often times, these traders are super disciplined (this part isn't too well known) and that they have mental stops such that once they know they are wrong, they don't hesitate for a moment to cut their trades short.

Having said all these, you should know where I stand with regards to whether one should use stops while trading forex (the mother of all markets).

Start developing good habits and you'll become a good trader. Good trading to you and catch ya again real soon!

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