The Forex market is extremely volatile and you need to trade it with managed risk. If you think that this market can be easily traded with high-risk exposure than you are just going to lose all your money. In fact, 95% of the traders are losing money due to their lack of trading knowledge and discipline. When the new traders jump into the online trading world they work very hard to find the entry point. They think if they enter the market at the right price then profit is guaranteed from that trade. But things are not all simple. You need to work hard to find your potential stop loss level. If you place it incorrectly then many profitable trades will be stopped out in the market. In fact, most of the intermediate traders are losing a huge amount of only due to this problem. But don’t worry, we will give you some amazing tips to set the perfect stop loss in your trading account.
Price action confirmation signal
The best way to set the stop loss in the market is by using the price action confirmation signal. As a full-time trader, you should look for a potential entry point at near the key support or resistance level. It’s true that you can also make money by trading the minor levels of the market but in that case, you will have many losing trades. Unless you have the extensive experience we highly suggest to use the higher time frame price action confirmation signal. Never consider support and resistance as a specific price level. It’s actually better to consider these levels as a zone. If you can find the perfect support or resistance zone then you will see that very few traders are being stopped out by the market. But this mastering this system requires time. So instead of testing this system with your real account, you should use the demo trading account to see how the market really works at a different level.
Always add 2-3% space to your stop loss price
There are many traders in the options trading industry making tons of money. But have ever asked them how they are making a consistent profit. If you do so then you will be surprised to hear that only by taking managed loss they are actually making money. As a currency trader, you should never place a tight stop loss.The professional traders always add some additional space for their trade so that the trades are not closed with a false spike of the market. But this is very hard to determine at your initial stage. At your early part of the trading career, you will have to go through many stopped out trades if you can learn from your mistakes then it’s just a matter of time to make a profit. Making money in the online trading world is not all easy rather it’s the job for the elite class trader. So be prepared for some hard work to master this skills.
Avoid news trading
News trading is very much popular among the new retail traders. The Forex market becomes extremely volatile prior to the high impact news releases and most of the major breakout occurs during that time. So being a new trader you should never open a new position before the news. In fact, you should not trade the market until the dust settles down. Let the market absorb the shock of the news impact and then you will see many golden trade setups. However, it’s true that if you can trade the high impact news than within a short period of time you can book huge amount profit. But trading is not about making money rather it’s about managing your risk. You should always ask yourself whether you have talent and skills to trade this market. If not that develop trading skills before trading with real money.