According to the big players: Stop Loss

There are plenty of opinions about Stop Loss. Many argue that Stop Loss is unnecessary. My opinion is that a reasonable and thoughtful level Stop Loss it is, despite its imperfections, a wonderful tool and one of the few that actually protects us from loss. Where we place our SL depends, of course, on the chosen strategy and on many factors adapted to it. For one it will be a level above / below the last hole / high, for the other it will be a fixed value of e.g. 20 pips, and for another it may be the SAR parabolic level from the previous bar.

Place the SL in such a place that its achievement by the price would indicate that the setup failed, and not at the point that determines the amount you absolutely do not want to lose. Bruce Kovner

When to use Stop Loss?

Many traders also emphasize the need to define the SL level as soon as the position is opened. It is a healthy approach, even without mentioning the techniques of trading, it is worth to put SL. Think about what will happen when you do not protect your position and you experience infrastructure problems (electricity, internet connection, hardware failure, etc.)? What will happen if an unsecured item stays without any care? It may end up really bad.

Serious traders set SL at the time of entry into position. Alexander Elder

Often, managing the course of a position is combined with securing it while the movement is going in the right direction for us. This is referred to as moving SL. You can also meet the concept of Stop Profit (not to be confused with Take Profit). We are dealing with it when we secure an already profitable position. This is, of course, a matter of naming, but this semantics causes quite interesting thinking.

The basis is security

First of all, Stop Loss protects us against loss, but when moved to a profitable position, we protect ourselves against the loss of capital that we have already gained in a given position.

READ NECESSARY: Stop Loss - Everything You Need To Know About Defensive Orders

The concept of Stop Profit also indicates that by closing a position on a hedge, we are closing a profitable position, which may still have the potential to increase profit.

Transaction management is one of the most difficult things in trading.

Probably my best technique is not to pick up the handset so as not to call the broker to close the winning transaction. Jerry Parker

Funny, but showing the fact that in addition to the ability to absorb losses, the awareness of allowing gains for growth is extremely important.

Losing positions are part of this business and you have to learn to accept them. Some trading techniques have such a low effectiveness that 8 positions on 10 end in SL, but then the high profit / risk ratio allows strategies to make money. These are individual relationships, depending on the methods used. It is important to be aware of these dependencies.

If you can not accept a small loss, sooner or later you will take the mother of all losses.

The elements of good trading are: 1. Cut losses, 2. ... cut losses, 3. ... cut losses. If you can stick to these rules, this is your chance. Ed Seykota