Minimise your losses when trading Forex with this one simple ruleby Timon Rossolimos
No one likes losing when they trade Forex and understandably so. But losing is part of the reality of the market...
So I've devised a rule over the years, which can cut your number of losing trades to a bare minimum.
I'm very excited to tell you about this rule, because I know, it will bring a new level of success to your Forex trading:
This rule will cut your losing Forex trades drastically
This is the crème de la crème to help handle your losing trades and curb your emotions when trading.
Imagine your trade is in a profit but still has to go higher to reach your take profit level.
It looks promising to be another one of your winning trades.
Next thing you know, the damn thing turns around and goes against you.
But you can stop this trade from making a loss, by using this one rule.
The Break-Even rule
In order to explain it with simplicity, let's use the currency pair USD-CHF (US dollar to the Frank).
Say you buy the currency pair at 0.9310 and you put your take profit at 0.9340 and your stop loss level at 0.9290.
This means you'll be willing to risk 20 pips (0.9310 – 0.9290) in this currency trade.
The next chart will show you what happens next with the break-even rule.
So now, all you do is simply add the 20 pips to the entry price (0.9310 + 0.0020) giving you 0.9330.
If the price hits this level, this will be your signal to move your stop loss to break even.
So let's sum it all up.
You first go long (buy) at 0.9310 and set your 1st stop loss initially at 0.9290 and your take profit at 0.9340.
The difference between your entry and stop loss is 20 pips (0.9310 – 0.9290).
And so you take your entry level 0.9310 and simply add 20 pips. This will give you the currency price level of 0.9330.
Once this price hits this level, it will be your signal to raise your stop loss to the break even mark at 0.9310.
With this rule, you can cut your losses, which will make your Forex trading a more easier and stress-free way of going about it.
"Wisdom yields Wealth'
Editor, Trading Tips