OK, here we are attacking another classic traders’ myth which on Forex - because of the market’s high volatility - becomes a matter of a trader’s life and death.
We must have heard this dilemma a thousand times: should we, or should we not use stops when trading? Some say stops are for sissies… Others say trading without a stop is suicide… Arguments are on both sides, and in our next posts we will try to unveil some of the reasons why we believe the “sissies” are more sensible in their approach than the “neckbreakers”.
If we place stops, they will be there to protect us from large drawdowns… But then again, if we don’t place any stop there will be nothing to be hit, so money will just flow in and out of the trading account freely… Will that work in our favor, or against us? Can that make us rich overnight without any effort, or will that simple trade that we took and finally went wrong eat up our entire trading account because we failed to place a stop?
These are all questions we will try to find an answer to in what follows.
(to be continued…)