How foreign exchange investors can effectively profit by speculating in foreign exchange is the core issue that all foreign exchange traders are concerned about. Investors who want to achieve effective profits in foreign exchange speculation must not only have excellent foreign exchange trading technology, but also have experience in controlling risks. Stop loss is one of the methods that must be mastered to control risk in foreign exchange speculation.
- Capital Amount Stop Loss Method
Before every time an investor enters the market to buy or sell, they clearly plan how many points to lose and stop-loss to exit. This is a good money management method, but it is also mechanized, so the premise of using it is that the trader must have a mode with a win rate higher than 60%, and at the same time ensure that the total profit pips is higher than the total stop loss pips. Secondly, it is necessary to have a deep understanding of the volatile nature of the market operation and have a comprehensive judgment on the market trend.
- Programmatic stop loss method
Programmatic indicators refer to indicators designed by traders themselves based on price, time, capital, and trends, and then trade according to their own indicators. When there is no more trading signal in the indicator, they will immediately stop or exit the transaction. Its advantage is that it can overcome the weakness of human nature. As long as the indicator has no signal for further trading, there is no reason or reason to continue to trade in the market. Take profit or stop loss immediately and wait for the next opportunity.
- Technical stop loss method
More complicated is the technical stop loss method. It combines stop loss setting with technical analysis. After eliminating random fluctuations in the market, stop loss orders are set at key technical levels to avoid further expansion of losses. This method requires investors to have strong technical analysis skills and self-control. Compared with the previous methods, the technical stop loss method has higher requirements on foreign exchange investors, and it is difficult to find a fixed pattern.
There are also several more flexible stop loss methods, which require investors to make their own flexible reactions to the trend in time
- Initial point stop loss method
The pre-set stop loss position before buying foreign exchange, for example, at 3% or 5% below the buying price (short-term, the middle line should not exceed 10% at most), once the price effectively falls below the stop loss position, then Leave immediately. The “effective break” mentioned here generally refers to 20 to 30 points.
- Capital preservation and stop loss method
Once you go long and the price rises rapidly, you should immediately adjust the initial stop loss price and move the stop loss price up to the breakeven price. This method is very suitable for actual combat operations.
- Trend stop loss method
Take an effective trend line or moving average line as a reference coordinate, observe the price movement, and leave the market immediately once the price effectively falls below the trend line or average line.
- Unconditional stop loss method
Regardless of the cost, a stop loss that runs away is called an unconditional stop loss. When the fundamentals of the market have undergone a fundamental turn, foreign exchange investors should abandon any illusions and fight at any cost in order to preserve their strength and fight again at an opportune time. Changes in fundamentals are often difficult to reverse. When the fundamentals deteriorate, investors should act decisively and cut positions.
Reminder: The dollar fell and commodity currencies rose sharply, and the yen recovered from a 20-year low. For specific operations, please pay attention to the Reelfinancial.com. The market is changing rapidly, investment needs to be cautious, and the operation strategy is for reference only.