When I started learning the basics of trading, I’ve learned the importance of using a stop loss. Stop losses are there to protect us, to protect our capitals, our money and our future. But that was only theory for me at that time. However, when I started trading (i.e. applying what I’ve learned), I really felt the important role that stop losses play.
Let me put it in this way. Let’s image
A construction worker on site without his/her helmet. Well he/she is in REAL danger of getting a serious injury.
A football team playing without a defense. This team is in REAL danger of losing the game.
A person not wearing a mouth mask in a public place. This person is in REAL danger of getting infected by the Corona-virus
I am here to tell you that all PRO traders know how much is important to use not just stop losses but also take profits. Now I know PRO traders usually use logical Stop losses and not an exact number; [this is another important discussion that I am going to launch next week].
Word of advice to #newbies. Wear your helmet, play defense, put a mouth mask and use a stop loss, Deal?
Also, I now understand the importance of a TP. You have to have a strategy for exiting the trade.
If you don’t have a strategy and arbitrarily exit, your success rate could be at risk because emotions will determine when to exit, instead of a thought-out process.
To not blow up all of their money in one go. Experienced or new, every trader must use stop loss on all their transactions. It also helps in avoiding emotions coming into the way of effective trading.
I find stop loss as one of the most important elements of my trades. It protects my capital and my account from blowing out. I try my best not to lose more than I can afford to.
