Using Stops effectively

This article is taken from the Forex Journal (May 2008 issue).

The author, Sunil Mangwani is a Physics graduate with a Diploma in Financial Management.

He has been trading the Forex market for the last 6 years and devises simple trading strategies based on his vast knowledge and in-depth study in the field of technical analysis. Sunil Mangwani will be key speaker at the International Traders Conference in 2008 October 29-31 - Barcelona (Spain)

  • Sunil Mangwani leads a discussion on methods to effectively use stops to preserve trading capital. In this article, he outlines ways to use the pivot point formulas as stop placement zones when trading Forex markets.

The first priority of a trader is to conserve trading capital.

The trader’s capital is his bloodline. Without capital, it is not possible to trade, so preserving it becomes a matter of utmost importance.

It is only natural that when a trade is initiated, the focus tends to be on potential profits rather than on the possibility of loss. We are usually so convinced that a trade will be profitable, that we tend to ignore the possible losses that would occur should the trade go wrong. One must accept that losses in trading are inevitable, but a successful trader is one who manages and controls the losses.

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