Financial Spread Trading - The Effect Use of a Stop Loss
Financial spread trading is a business where you have the potential to earn a great deal of money but at the same time losing money is a distinct and very real possibility.
Therefore, in order to limit any potential loss it is strongly advised to place a stop loss as soon as you enter a trade.
A stop loss is simple a price in the market where if your trade goes against and touches this given price you are stopped out and therefore your risk is limited to the number of points between your entry and your stop loss.
All financial spread trading companies allow you to use a SL, so if you are placing your trades via phone don't forgot to place one at the same time you place your trade as if you fail to do so you could be in for a nasty shock if your trade goes against you.
Nearly all financial spread betting companies now have trading platforms that allow you to record a SL position automatically.
When you open a trade where you place your SL will depend on your trading strategy but it is wise not to place it too close in order to give your trade 'breathing space' and a chance to develop.
There is nothing worse financially or psychologically than to see your trade stopped out only then to see it shoot off in the direction you had intended.
If you feel that you are risking too much money by allowing more leeway with your stop loss position it is always more sensible and more profitable to reduce your £/?/$ per point size rather than keep your stop too tight.
Therefore, in order to limit any potential loss it is strongly advised to place a stop loss as soon as you enter a trade.
A stop loss is simple a price in the market where if your trade goes against and touches this given price you are stopped out and therefore your risk is limited to the number of points between your entry and your stop loss.
All financial spread trading companies allow you to use a SL, so if you are placing your trades via phone don't forgot to place one at the same time you place your trade as if you fail to do so you could be in for a nasty shock if your trade goes against you.
Nearly all financial spread betting companies now have trading platforms that allow you to record a SL position automatically.
When you open a trade where you place your SL will depend on your trading strategy but it is wise not to place it too close in order to give your trade 'breathing space' and a chance to develop.
There is nothing worse financially or psychologically than to see your trade stopped out only then to see it shoot off in the direction you had intended.
If you feel that you are risking too much money by allowing more leeway with your stop loss position it is always more sensible and more profitable to reduce your £/?/$ per point size rather than keep your stop too tight.