Is the use of Stop Loss the answer to all trading risk concerns?

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Eleni Anna Branou
Moderator
6620
Eleni Anna Branou  
  • 42% (10)
  • 58% (14)
Total voters: 24
whroeder1
17942
whroeder1  
Without a initial SL, you have basically infinite risk.
  • You place the stop where it needs to be - where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.
  • Account Balance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the SPREAD, and DeltaPerLot is usually around $10/pip but it takes account of the exchange rates of the pair vs. your account currency.)
  • Do NOT use TickValue by itself - DeltaPerLot
  • You must normalize lots properly and check against min and max.
  • You must also check FreeMargin to avoid stop out
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