STOP LOSS IS: A stop-loss order is one that automatically terminates a losing position when the price reaches a certain threshold.
We normally compute SL in pips, however there are other ways to do it. It might be based on time, percentage, or volatility. For some investors, SL is a key piece of news that changes their perspective of the asset’s worth. Regular stop losses can also be numerous and different, such as a trailing stop. In addition, we occasionally shift our SL to entry after the half close to protect our gains and keep our position risk-free. However, all of the scenarios I outlined above had one thing in common: the SL was used!
To be honest, I’m amused by the large amount of folks who give me screenshots of their MT4 with multiple open trades on the same pair, all without a stop loss and with 90% of their account lost. And they ask me what they should do. The artwork above is an excellent depiction of what it would take to heal from such a loss. With a 90% loss, you only have one-tenth of your original account left. To restore your losses, you must earn ten times more money than you have left. Only a 999% gain is required to reclaim your former account. It just took you a day to blow it, and it may take months to regain your losses. This is the ugliness of trading. The market is ruthless and will punish you if you disrespect it. If you’re thoughtless or make mistakes. The market always returns to collect, waiting for you to let down your guard and relax for a moment.
Please always take Stop Loss since it prevents you from losing too much!
I hope you all learned something today.
Best of luck to everyone!
And may the odds always be on your side.