How to manage risk using StopLoss function

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How to manage risk using StopLoss function

Post  ilearn2t on Sat Dec 10, 2011 7:29 am

Hello Everyone

All "newbies" in the forex business could learn how to use the StopLoss function to control their risk as part of their "money management" program using a one cent per pip.

Those new to trading might ask where to set a StopLoss to avoid large losses, this can only be achieved by oneself depending on the strategy being used.

Example: (excluding swap etc)

More traders believe that a 1% or 2% risk of their capital on a single trade is acceptable.

So if you start with a $100 investment your maximum risk will be $1 (1%) or $2 (2%) on a signal trade. (Pip value = 100 pips)

If your order fails your next trade will be $9.90 (1%) or $19.60 (2%) on a signal trade (Pip value = 99 pips) and so on.

Placing a 2% or 4% TakeProfit (double win to loss risk) will ensure one win to two loss breakeven scenario.

10 losses in-a-row will only have a 10% or 20% drawdown depending on which risk percentage you choose.

Good luck
ilearn2t
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