Significant Approaches In Limiting Your Losses In Forex Trading
If you want to limit your losses at times when the market shifts against an open position, then you better use an important tool in FX trading such as stop loss order. If you don't limit your losses by using preventive stop loss orders, you cannot trade with profit over a long period of time. Yet, you cannot avoid to be nervous everytime your position closes with a loss especially when you catch several stop losses in a single row. Not only large draw downs can be caused by multiple stop losses but can also potentially be lethal to your deposit.
6 years ago I came across a much better alternative to stop losses. Just to make sure, I thoroughly tested it before I use it and since then, I use it everyday with a great success. Ask yourself a question to understand what I am pointing at...
What is the true purpose of a stop loss? Right... Minimizing your losses.
Is there any other way that we can limit losses? Of course, we can. In most cases, when a planned loss is reached, you immediately close a loosing position. However, rather than closing a loosing position...
It is also possible for you to open an additional position in the opposite direction where you set your stop loss target point. And you will end up with 2 open positions. One is buy, and the other one is sell.
You can close both positions simultaneously and get away with a planned loss along with an additional spread for the second position when you are mentally prepared to take a loss. But from what we so called lock or hedge, this is not what we really want to get.
The beauty of hedging is in timing. You are going to limit your loss at a particular time and exit the market at a different time. f you make a wrong bet, and open a position against a strong trend, it will be much easier and safer to exit the market when the strong movement is over and market flats out. When inter-session and inter-trend flats out, you can take it as a great opportunity to exit the market with a zero loss. You may observe that FX market do not moves strait up or down. Its movement is in rages between short-lived trends. Oftentimes, the ranges of these are amidst 30 and 50 pips which concurs to the average stop loss level of a day strategy for EURUSD currency pair. Another tool that you may use in closing a loosing position is a turning point and a new trend. In this case, you even have an opportunity to close it with a good profit, and I do it all the time.
Personally, I've been making the best out of hedging stop loss for 5 years with great success. I bases my trading system on high-quality third-party FOREX signals, hedging, money management and special rules of opening and closing positions. This system gives me around 30% of my deposit a month, and it doesn't require me to do any technical analysis in order to enter the market at a right time.
If you want to discover my strategy, and learn how you can make $3,000 a month by depositing $10,000 on your live account... If you want to have an access to my free training where you can find my explanation in details, you may enter your email address in the box and hit the orange button.