Hi, forgive me if i am asking a crazy question. I am just starting to learn about forex. Why will people use a stop loss when they can just set a limit, because the price is going up and down anyway. why will they set a stop loss to sell on that losing price when they can sell it later when it goes up. why not just set a limit. hope you understand my question.
Answer me this:
How can you (or anybody) [B]KNOW[/B] that the price will keep going up in the future? :rolleyes:
Btw, best way to use stop loss is to have it on place you would get out anyways, example at a point you realize your “opinion” on the initial trading direction is no longer valid. 
I’ll trick my self into believing that this is a real question 
The question is: why don’t you set a buy/sell limit order on the price where you would place your stop and then liquidate it later for a profit.
That is all fine and dandy, but you will have that trade that just never wants to come back and breaks your account if you don’t get rid of it.
I remember I was buying OJ Futures as price was falling; it was in “extreme level 1” according the the Ken Roberts system I was fallowing at the time, but instead of using options I was smart and traded out rights.
Why would I pay for an option when I can just wait it out with cash?
I was losing $1,500 - $5,000 a day in a slow down trend and it was not fun.
It ended up turning around (eventually) and I made money because the price could not go to zero, but then again I had to wait for YEARS in several commodities just to cash in a profit.
All I am saying is that what you are thinking about doing is no way to trade.
Profit potential is directly related to the movement you risk.
If 30 pips risk is 4% then 30 pips profit is 4%.
If 200 pips risk is 4% then 200 pips profit is 4%.
Its all about how low you can go with risk and capture 2-4% per day.
Little Example of consistent returns starting with $400:
2% per day / 10% per week ( ~ ):
$400 + 13 weeks = $1,380
$1,380 + 13 weeks = $4,761
$4,767 + 13 weeks = $16,446
$16,446 + 13 weeks = $56,738 (YEAR 1)
Y2: $8,048,001
Y3: $1,141,568,701 (yes with a “B”)
Don’t think about getting millions over night and just keep taking your baby steps of consistency toward the goal.
When trading you must know how much you are willing to lose if the market doesn�t behave like you were expecting. This is just a rule to get more confident in your system.
SL is a mechanism to avoid when the trade goes against us and we suddenly find that the loss is bigger than we planned.
How’s it,
Yeah, we all need to crawl before we can walk. Set your stop losses and follow your rules and you will be successful. KISS… and stay consistent never give up!
Most traders who blew their accounts didn’t set SL and they put the blame on their broker.
Whats a good rule of thumb to setting a stop loss?
I sometimes trade only lateral lines aiming for just 5 pips. Is a SL of 10 too tight for EUR/USD?
I trade 5M, should I be looking instead to support and resistance?
I realize it may have to do with what your comfortable with, but is there a popular belief?
Money management?
Use it but don’t be so hard on it.
You must know what the odds are but in this market you can expect the unexpected.