Trade with or without stops in Forex?
So, who is a loser or has fewer brains: those who use stops or those who don’t? Guess what – both sides are smart if they want to be smart. How?
If a trader is glued to the monitor – NO STOPS needed!
Yes, you heard it right. Stops are pointless and can cause only additional losses for traders who trade 1-5 time frame and up to 1 hour time frames IF they watch the price tick by tick.
What about spikes, you would probably ask. Well, spikes are called so because they spike and disappear. Throughout the history of Forex trading no spikes were literally shooting for the stars, however some of them could be quite nasty. A trader who watches charts closely ALWAYS has time to think and close a position after the spike, or may be even observe for a couple of seconds market’s reaction and then hit the button immediately.
I repeat, if you monitor the chart tick by tick, no stops are needed!!! Otherwise, you are deliberately putting yourself at risk of market noise and those price spikes, which will spike, take you out with a loss and disappear, making your worse nightmare a real experience.
Protective stops are a must for position traders who use large time frames in their arsenal. Large time frames (3-4 hour and up) are difficult/actually impossible to monitor on a “glued-to-screen” basis. That’s why stops are needed to protect the capital from sudden shifts in the market that could bring losses larger than expected. While being away from the chart a trader must be confident that his capital is immune from unwanted losses. On large time frames choosing the best stop order is relatively easy task as bigger market picture can be observed. A well placed stop loss order on high time frame is seldom hit wrong, e.g. when a trader is stopped out there is usually a real reverse in the trend.
Extra care should be applied to trades left overnight. Trading on the large scale requires Stops to be in place. That’s the rule for your well being, well sleeping and well account managing!
Make it a habbit - if you go away from the screen, place a stop order! Then you will never learn what’s it like to lose a large portion of your account or even worse - get a margin call…
**Forex Lord of Darkness**
