Beginner questions

Do you close a trade before it hits your stop loss or you wait for it to hit your stop loss by itself: What are the pros and cons?

Depends on the the time of day , if coming to the end of the night I would just kill it, if in the middle or start would let the trade play out as could change at any second.

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Great. I just feel like a coward. I close trades as soon as I see them approaching my sl for fear of losing too much when the trade potential is diminished. But just sometimes, I am left almost tearing my hair for not holding on when the trade moves towards my tp instead.

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Don’t beat yourself up. We’ve all been through that when we started off. You are trading on a demo account aren’t you?

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This is why SL and TP can be helpful. Just set everything, and forget about.

“Set it, and forget it!”

If you go do something else, you’ll be distracted and won’t eve think about it.

You’ll come back to it later or a few days after, and see what happened.

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No right or wrong answer. Just pick one and stick to it. Then analyse your trades and see if you had closed trades close to you SL would they have stopped you out or turned and hit TP. When you get your answer you stick to that.

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No. I’ve been trading live since January this year. I blew my first account in March when Corona was at it’s peak and the market went wild. This is my second live account and I got so beaten down again. I lost only 40% of my capital since I was using fixed fractional risk management strategy. I transferred my funds to a micro account

Great suggestion. I’ll try it

Hah, good old set and forget! Its the title of one demand and supply booklet I read by Alfonso. It’s great but how will you effectively perform trade management if you would be away from the screen for a longer time?

I see alot of people here are saying that it doesn’t matter or that they do sometimes but I am going to go out on a limb here and disagree… why?

How have you currently defined your edge if you have one? If it is from backtesting a certain strategy then by cutting your stops early you could be jeopardising the profitability of that edge.

If during backtesting you play the trades out… emotionless, let it either hit SL or TP and this gives you a good percentage return month after month…

Then when you trade live all of a sudden you are not letting your trades run their course and are cementing your loss early in the piece… It may only take a handful of those trades to turn around before hitting stop loss and become winners and could be the difference between a profitable month or not.

If you cut your losses before they hit SL in backtesting is your edge still profitable?

Not saying you are wrong… these are just things to make sure you think about as while you might think you are ‘minimising’ your losses you could actually be making your overall strategy less profitable over a larger sample size if that makes sense.

Happy Trading,
Nate

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AS a beginner should i trade using high leverage ? is it a big risk for beginners to trade with higher leverage offered by broker ?

Leverage works for you when you are winning and against you when you are losing. As good as it seems, using a very high leverage can be dangerous if you don’t properly manage your risk. The bottom line? Find a balance.
Warren Buffet doesn’t use so much leverage yet he’s one of the greatest traders of all time.

You have opened my eyes. My actions have greatly decreased the profitability of my system. I think it will be to my advantage of I just let my trades play out.
Thanks for the insight

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I hope your trades go better from now on! :smiley:

I hope so too. :grin:

Stop Loss Hit is a part of Forex trading. In my opinion, if you have done a good analysis and placed stop loss, then stop loss should be allowed to hit. I wait until hit stop loss in every trade. I have got so many results that I have made a profit by turning the price movement just before the stop loss hit. And I trade in such a way that if my stop loss ever hits, I get a new trade.

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Going with low-medium leverage is better for the start according to me. High leverage brings a lot of risks attached to it, so for the start, it might not be a good choice.

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I almost always wait for the stop to be hit of the trade is going negative. The stop-loss should be the price that is closest to entry but also the earliest point at which I would no longer wish to be in the trade. So an exit before that would be premature.

However, occasionally its a strategic decision to get out, even if the individual chart still looks strong. This has happened when I’ve had a long position in a currency highly correlated with another, and the correlated currency’s TA has turned strongly negative. Or I’ve had multiple long positions in a currency and the other pairs based on that currency turn negative.

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I plan my trades before the day and set the stop loss and take profits. There is no definite answer to your question. But most of the time I stick to my plans.

Leverage is what they called it, a double-edged sword because when you are using high leverage and if you are winning, you get many profits but if you are losing, you lose lots of bucks.
For the beginner, it is quite best to stick with lower leverage. Even 10x is the max that the beginners can go for.