Stop-loss will always disconcert you. It will never make you happy.
But, you have chosen the path of a trader, and trading is always associated with a certain degree of risk.
STOP-LOSS - is your decision of how much you are willing to lose.
You always must be willing to lose.
There is a saying “You have to pay it forward to get a two-fold” That is specifically true in the case with the STOP-LOSS.
Most of the novice traders, and even seasoned ones, me included, experienced this situation; they set up a stop-loss. The STOP is triggered and immediately after that, the market turns around in the desired directions. If it is happening a few times in a row, a trader starts to hate this important tool for risk management. Here is what the trader thinking:
‘’I have not only messed up a good trade but also lost money”
It is important to understand when using a STOP-LOSS, it has to be set up properly. The price points of the STOP must be determined correctly.
Most of the time you can read or hear “Set up a STOP-LOSS behind certain level or behind extreme points”. But what is the level or which extreme point is not clear.
We will talk about it in the next post…
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