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How Do You Analyze/Interpret a Good Stop Loss Setting Percent?

How Do You Trade a Good StopLoss Setting Percent?

Strategies of Setting Stop Loss In Trading

Forex traders using a FX strategy must have mathematical calculations which calculate where the Stop-Loss order should be placed.

A trader also can place a stop-loss in accordance to the indicators used to set these stop loss orders.

Some indicators use math to figure out where to place stop losses, helping to find the best time to end a trade.

These indicators can be used as the basis for setting these stop loss orders.

Forex traders set their stop-loss orders based on a specific risk to reward balance. This method relies on some math rules. For instance, if a trader sets a stop loss of 20 pips, they might do this when they think they can make 40 pips in profit. This results in a risk to reward ratio of 2 to 1.

Alternatively, some traders allocate a fixed percentage of their total trading capital to each transaction.

To set a stop loss it is better to use one of the following % based methods:

Setting Stop Loss based on Percentage of Account Balance

This method for setting stop loss orders is based on a percentage of the account balance that the trader is prepared to risk.

The trader decides how far he will set the order level based on the open trade size that he has purchased or sold, assuming one is prepared to take a 2% chance of account balance.

How Do I Set Stop Losses depending on the Account Balance Percent Method

How Do You Analyze/Interpret Good Stop Loss Setting Percent?

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