This happens not necessary at tops and bottoms but at fib levels as well. The explanation how to place a stop loss is too simple, it would be too easy then.. Market create fake breakouts just to go in the opposite direction. I do not know many traders who would be able to keep pip stop loss if you trade on H4 chart. I felt I almost have to feed the market some loss before I really know their intention. Recently my stop for FATE below 4 was triggered, then it came right back above 4.

Then I bought again. This is a confirmation. My old me would not buy back. But now I know enough here I should buy more since probability is much higher. If my stop loss never triggered, or I never bought this stock, I would not be able to see it so clearly and catch it so perfectly.

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I have been thinking if I could avoid this loss by just watching, but somehow I never got the same gut feeling. It happens soo often, the accumulated small losses can not be ignored. I always use stops, but it is very frustrating, There is never a perfect place. Recently AXTI had a price jerk from 9. But after all it is a cost, always makes me think if I can reduce this loss more. During a range, should I always wait for a price rejection to get in that means I will miss some trades or the size is so small in the first round and trades go my way and I make a very tiny no meaningful profit ….

Regarding that point above, I noticed that trying to put the stop loss where the trade is proved wrong eg, a number of ATRs meant that one has to use a much smaller position size to accomodate the extra risk, meaning that I was winning more often, but the winners were not meaningful in my account. Yes, your gains will be smaller. I see. I avoid stop hunting by placing my stops at area where it invalidates my trading setups Thanks for this block post Rayner Teo!

Thank u so much Rayner for a great article,i feel lyk u were reading my mind coz i was about to change my broker coz i felt lyk they were hunting my stop loss each time i placed a trade…. Thank you so much on this write up,before i always get stop hunting but now i have confidence on my stop loss ,may God bless you…. Today, 31st March at around It then resume back business as usual at its original price before the plunge. I was 70 pips ahead before it happen, and in the end, it hit my stop loss with pips.

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I just woke up and was about to move my stop to breakeven and the plunge happened. Talk about timing. And the bottom of the plunge is where my stop loss is. One way to avoid such situation is to set a trailing stop loss MT4 platform , but can you advise what is the best method to set trailing stop loss?

A too tight trailing would get stop out easily but would keep most of the profit and a wide trailing stop loss would not easily be hit but would lose back quite some profit if it does. Any good method to suggest here? What is more important than absolute value of the price is the trend. Stop hunting usually result in very brief dip or spike. With this, you can put stop loss tighter, to compensate the fact that if you wait for a candle to close before stopping, you may increase loss.

If this is not available, another option would be to code a bot using the broker api to implement this behaviour. Rayner un saludo desde Ecuador. Hey Rayner, as a beginner, learning forex trading was the hardest thing I ever encountered until I met your telegram channel. Your blogs are simplified and reliable to an extent that anyone else can understand regardless of academic background. Please do something on volumes.

What is a stop out level in forex

Ie, how would we decide, in this example, between 1 going short as in the figure, 2 waiting a bit more for it to hit support, then going long, or 3 getting ready for an upward breakout instead? Any insights into how to decide between the above 3 choices in this example would be appreciated.

Hi rayner, thanks for the wealth of knowledge always shared with us. Anytime i tried to order for the book, it tells me that the book is not available for purchase in my country. Please log in again. IBKR does provide an expedited process to assist account holders who wish to close all non-Base Currency positions collectively.

To use this process, start by clicking on the Account button at the top of the TWS, which opens up a window displaying account balances including cash positions in all denominations. Upon clicking that link, the account holder will be guided through a series of steps which will create a market order to close any non-Base Currency positions. IBKR will charge a commission if the position was liquidated in order to restore margin compliance. In situations where a margin deficiency exists and the position is closed in an effort to restore margin compliance; and 2.

Glossary terms:.

Stop order definition

Because forex leverage does not change the value of the lot, and you have a choice to trade different lot sizes, it is not necessarily more risky to have more leverage, as it would be with futures, where you cannot change the lot size. Higher leverage just confers the ability to trade larger lots or more lots with less capital. In between your minimum and maximum use of leverage and lot sizing is a vast range of flexibility.

Having more potential for leverage can be dangerous for greedy traders, but every greedy trader should have a chance to hang himself and remove himself from the marketplace. Yes, especially for dumb, greedy traders who use too much of the leverage available to them.

I believe that the flexible leverage AND flexible lot sizing conferred by Forex can allow most traders a far safer trading arena than either stocks or futures. A futures trader must use the leverage geared for the contract specified, which can be quite high and dangerous. A Forex trader, in contrast, can safely trade lots and leverage in proportion to his account size.

Such a trader can then reserve the potential leverage for diversification, opportunity or emergency. Let us go over each one. By diversification, we mean the potential to have concurrent trades that employ different strategies on different markets. By opportunity, I mean that there may be times in the market when you discover an amazing opportunity and you want to capitalize on it with greater leverage or more positions. If you think that the odds are greatly in your favor, the leverage is there for you to use. You have the potential to strike big and hard.

Then there are cases of hardship. The greater leverage capacity is thus allowing you to maintain your initial lot sizing as your account drops. Compare that to stocks, where every percentage decline in your account would force you to trade block shares of smaller and smaller stock values, which would make it harder and longer to climb your way out of your drawdown.

In the end, your brokerage leverage determines your maximum potential leverage, and it is in your best interest to trade the smallest degree of it, reserving the rest for plays of diversification, opportunity and hardship.

What is a stop order?

The capacity to make another trade is determined by the free margin which is the equity from which the currently used margin is subtracted. Margin or Used Margin The amount of money in your account that is currently used in open trades. More precisely, the formula is as follows:. Usable or Free Margin: It is the amount of money in your account minus the margin or used Margin. We have already discussed what Margin and Free Margin is.

What is the meaning of this? Let us break down the above screenshot:. Balance: In Forex it is not a call from your broker to add more funds, as it is with stocks and futures. See table above. The greater the leverage used on any particular trade, the more risk capital you have at risk, and the more likelihood of a margin call. You should fully understand how your margin works, and be sure to read the margin agreement between you and your broker.

It is always a good idea to keep an eye on your Used Margin and Free Margin to ensure you are not using too much margin and that you have plenty of free margin left. Soon after your positions will be closed out usually one by one, starting from the least profitable until the minimum margin requirement is met. You have at least some money left in the account in an extreme adverse market move.

This broker is being very generous as to how it handles your abuse of margin limits. By having your margin call level set at these lower levels, your risk of having a margin call is pushed further away which can be good if you are trading with grid or martingale systems.

However, if you are not careful enough, these more generous margin call brokers can leave you with very little left in your account if the market moves strongly against you. At this point, his margin bar has turned red as a warning. Depending on the margin policy of the broker, his positions could have been totally or partially liquidated. Poor Jeff, he took advantage of too much leverage and got himself in trouble. Jeff would then be able to fight another day. Most successful traders are careful, cautious, and objective when analyzing the market and seeking a trading opportunity.

They rarely use more than leverage, they always use reasonable stop losses and they use effective lot sizing models. Novice traders, no matter how well schooled and prepared, often commence their career with a shaky start. They soon realize that not every trade makes money, and in fact most trades lose.