Why Do You Need to Set a Stop Loss?

Set A Stop Loss

It would be a stop-loss if I had to mention just one compulsory trading “tool” to be a successful trader. Without knowing how to set a stop loss, you shouldn’t even consider going into trading at all.

Markets, by default, are volatile; it is difficult to predict the rate at which the markets will go against your bias. Therefore, a stop loss is a defense to your trade, irrespective of whether you’re trading in short or long positions.

Interestingly, about everybody can benefit from this tool. Before looking at why you always need to have this tool in place in detail, Let’s examine the concept ‘‘Stop loss’’ extensively.

Are you contemplating setting stop-loss orders or unsure why you must set a stop-loss on your trades? This article is just for you! I have comprehensively explored the top 6 reasons you should never trade without setting a stop loss.

Top 5 Reasons Why You Need To Set A Stop Loss

1.      Helps Protect Against Excessive Losses

The primary aim of trading is to guard your capital, which is only possible in a measurable way by using the concept of stop losses. Stop loss is your guard against market volatility; uncertainty in the market cannot be avoided. Hence, the only way out is to guard your downside risk by setting proper stop-losses while trading.

If you’re not using stop-losses, it’s only a matter of time before a sizeable losing position gets out of control and will ultimately wipe out most of your trading returns and entire account! So, if you want to remain in the game in the long run and increase your trading account, you must use stop-loss orders in every trade you’re taking.

2.      Provides Automation

Stop loss in trading helps to automate your selling; hence you don’t have to be present in front of your trading screens at all times. In addition, stop loss is automatically executed, thus eliminating manual involvement each time a forex market price changes unpleasantly.

Furthermore, you don’t have to monitor the market’s daily performance regarding stop-loss orders. This ease is convenient when you are on holiday or in a situation that prevents you from viewing the forex market for an extended period. A stop-loss gets triggered automatically once the market reaches a particular price.

3.      Helps Maintain ‘‘Risk and Reward’’

You know how much capital you risk by measuring your prospective loss on stop loss on all your open trades. That instantly triggers if you must cut your positions to appropriately limit risk. Hence, stop-losses play a significant role in risk management.

Depending on the stop-loss, traders usually calculate what position size to take, how much they’re risking on any single dollar they’re making, how much money to risk on one trade, and many more. 

For instance, if you state that you will take just 2% or 5%, ‘the risk for making that much profit. Thus, a stop loss helps you to preserve your “risk and reward.”

4.      Offer Zero Cost

The most significant advantage of a stop-loss order is that it is easy to implement yet, costs nothing. However, once you reach the stop-loss price, your commission charges imply it is time to sell.

Your regular commission is charged only if the stop-loss price has been reached and is sold. One way to think of a stop-loss order is as a free insurance policy.

5.      Helps Promote Discipline

Stop-loss orders help protect your decision-making from emotional impacts. People tend to be carried away by the forex market or crypto fluctuations. For instance, they may keep the false belief that the market will come around if they give it another chance; this wait may trigger losses to mount. Hence, stopping loss instills trade discipline and avoids this emotional trigger.

It’s crucial to avoid emotional trading, which can lead to overtrading and blow up your trading account. Stop loss helps you stick to your strategy and promotes disciplined trading. This trading concept gives you a decent idea of your trade-off risk-return in each trade. This is only possible if you put your stop loss levels and profit targets well beforehand.

Final Thought on Why You Need to Set a Stop Loss

Interestingly, Stop-loss orders can be incorporated successfully in any trading strategy. As a result, it significantly affects your trading, risk management, and overall performance.

A stop-loss order is a simple tool that offers significant benefits if effectively used, particularly to avoid excessive losses or lock in profits.

Now over to you…Happy Trading!

Related Articles

This Post Has 26 Comments

  1. Ikaria Juice Review

    I was suggested this web site via my cousin. I’m not sure whether this publish is written by means of him as nobody else recognise such exact about my trouble. You are wonderful! Thank you!

  2. fitspresso reviews

    What Is FitSpresso? FitSpresso is a dietary supplement that is made to support healthy fat-burning in the body

  3. Excellent items from you, man. I have take note your stuff prior to and you’re just extremely wonderful. I actually like what you’ve obtained here, really like what you are saying and the way through which you assert it. You are making it enjoyable and you continue to care for to keep it smart. I can not wait to learn much more from you. This is really a great site.

  4. Leanbiome

    What i do not realize is if truth be told how you’re not actually a lot more neatly-preferred than you may be right now. You are so intelligent. You know therefore considerably in terms of this subject, made me personally consider it from numerous various angles. Its like men and women aren’t involved except it?¦s one thing to accomplish with Girl gaga! Your own stuffs excellent. All the time care for it up!

  5. rponerve 6 reviews

    What is ProNerve 6? ProNerve 6 is your complete arrangement made to address the multifaceted necessities of nerve wellbeing

  6. fitspresso reviews

    What Is FitSpresso? FitSpresso is a natural weight loss supplement that alters the biological cycle of the body to burn more calories and attain a slim and healthy body

  7. What Is Sugar Defender Supplement? Sugar Defender is a plant-based supplement and it helps to regulate the blood sugar levels in the body.

  8. fitspresso

    You have remarked very interesting points! ps decent internet site. “‘We’re always lucky,’ I said and like a fool I did not knock on wood.” by Ernest Hemingway.

  9. tonic greens

    Hi, just required you to know I he added your site to my Google bookmarks due to your layout. But seriously, I believe your internet site has 1 in the freshest theme I??ve came across. It extremely helps make reading your blog significantly easier.

  10. Pronail Complex

    Thank you for sharing excellent informations. Your web site is very cool. I am impressed by the details that you have on this website. It reveals how nicely you perceive this subject. Bookmarked this website page, will come back for more articles. You, my pal, ROCK! I found just the info I already searched everywhere and just couldn’t come across. What a great website.

  11. I’d have to examine with you here. Which is not one thing I usually do! I take pleasure in reading a post that may make folks think. Additionally, thanks for permitting me to comment!

  12. java burn

    Java Burn: What is it? Java Burn is marketed as a natural weight loss product that can increase the speed and efficiency of a person’s natural metabolism, thereby supporting their weight loss efforts

  13. Great blog here! Also your website loads up fast! What host are you using? Can I get your affiliate link to your host? I wish my web site loaded up as quickly as yours lol

  14. Great web site. Plenty of useful info here. I’m sending it to some friends ans also sharing in delicious. And of course, thanks for your sweat!

  15. zoritoler imol

    You should take part in a contest for one of the best blogs on the web. I’ll suggest this web site!

  16. Fitspresso review

    you have a great blog here! would you like to make some invite posts on my blog?

  17. Suivre Téléphone

    Le système Android vous permet de prendre des captures d’écran sans aucun autre logiciel. Mais ceux qui ont besoin de suivre secrètement des captures d’écran à distance ont besoin d’un tracker de capture d’écran spécial installé.

  18. Suivre Téléphone

    Une fois la plupart des téléphones mobiles éteints, la restriction relative à la saisie d’un mot de passe incorrect sera levée. À ce stade, vous pouvez accéder au système par empreinte digitale, reconnaissance faciale, etc.

  19. aizen power reviews

    What Is Aizen Power? Aizen Power is presented as a distinctive dietary supplement with a singular focus on addressing the root cause of smaller phalluses

  20. najlepszy sklep

    Wow, wonderful weblog layout! How lengthy
    have you been blogging for? you made blogging glance easy.
    The whole look of your site is fantastic, let alone the content!

    You can see similar here najlepszy sklep

  21. hackers for hire

    Greetings! Very helpful advice on this article! It is the little changes that make the biggest changes. Thanks a lot for sharing!

  22. Bom88

    Thanks a bunch for sharing this with all of us you actually know what you are talking about! Bookmarked. Please also visit my web site =). We could have a link exchange contract between us!

  23. tlover tonet

    I have been examinating out a few of your stories and i can claim pretty nice stuff. I will surely bookmark your site.

  24. Abigail Benincasa

    Hello, i think that i saw you visited my weblog thus i came to “return the favor”.I’m trying to find things to enhance my web site!I suppose its ok to use a few of your ideas!!

Leave a Reply

Important Link

Fund Your Deriv Account
Withdraw Funds to Your Local Currency
VIP Trading Signals
Learn To Trade

Contact Us

Follow Us


Forex, Crypto, Options, and Binary Options have both large potential rewards and large potential risks. Therefore, before investing or trading any of the assets, ensure you are aware of and willing to accept the accompanying risks. Do not trade money you cannot afford to lose.

All Rights Reserved. None of the content of this website can be published elsewhere by any means without the prior consent of the owner(s). Please, check our terms & conditions and privacy policy before continuing to use this website.

This website and its owner(s) are not in any way liable for any incurred loss, whether caused by the information provided on this website or otherwise. The use of this website, including the content and information provided, is the user’s sole liability.