Forex: Where to put Stop Loss?
One of the simplest methods for placing a stop-loss order when buying is to put it below a "swing low." A swing low occurs when the price falls and then bounces. It shows the price found support at that level. You want to trade in the direction of the trend. As you buy, the swing lows should be moving up.
An instruction to automatically exchange when the price reaches a price boundary predetermined by a trader is called Order.
To ensure your profit is locked and your risks are minimized, you can utilize the Stop and Limit orders. Due to market volatility, it is crucial to reduce your risk exposure by using the stop-loss order (An instruction to close out a trade at a price lower than the current market level ).
There two types of stop loss orders, namely standard and guaranteed.
A standard stop loss order, when triggered, closes the trade at the best available price.
A guaranteed stop loss, when triggered, closes your trade at the stop loss level you have determined.
A limit order is an instruction to close out a trade at a price that is better than the current market level and is used to help lock in price targets.
If you are very optimistic, you may miss clues that the market is turning against you. Your strategy gets you into a trade, with an initial profit target and stop loss. Once you are in the trade though, it is a different world. All sorts of things could happen, but stop loss can mitigate huge damage.