Strategies on How to Limit Trading Losses-JB88

Strategies on How to Limit Trading Losses

there is when trading forex or transactions or open positions sometimes you will experience losses first. This is due to price movements or price fluctuations. Then how do you limit losses in forex trading so that losses do not further erode the capital you have.

1. Determine the strategy

By monitoring the trader can ensure and determine which strategy is running as it should so that the risk can be minimized according to the initial goal.

2. Risk tolerance

This step alone determines how much risk the position needs to be hedged. Traders never have zero risk. There are some of them that determine the level of risk that is willing to be taken or willing to be paid to eliminate excessive risk.

3. Analyze risk exposure

Traders must identify the type of risk that exists either in the current position or in the position it will be running. This identification aims to determine the high or low risk in the forex market today.

Stop Loss

For most traders, the decision to place a stop loss is an uncomfortable choice because it means they have received a loss experienced. If you want to choose this method, it's good to know how to determine forex stop loss first. The point is that every trader has the right to decide which trading model is the most suitable for him either by using a stop loss or ignoring it, it returns to the trader itself. Every forex trader has its own characteristics in determining this stop loss value.
It could be said that those who trade forex without a stop loss are reckless traders. Why is that? Therefore, the stop loss functions like a brake. You need it to minimize losses. Some traders (professionals) may assume that trading without a trade loss is more profitable because you will not get the wrong position. But if you trade without a stop loss, you can get a margin call.

There are several ways to determine the stop loss level based on the strategy :

1. Stop loss on blind trading

The strategy of stopping loss on blind trading focuses on money management, so it is very often the entry points, exit points, and profit targets. This is not the result of analysis but because of the mathematical calculations of trading strategies.

2. Stop loss on real trading

Correct trading is opening a position that is always preceded by analysis. This stop loss is determined in several ways, first by using the indicator with the rules of the game is to open a position with the stop loss is the value of parabolic SAR at that time. The second way is to use a support or resistance line assuming that the level will not be touched because the market will bounce before the stop loss level, therefore you can place a stop loss position behind the support and resistance lines.

Using trend lines

The trend line can also be a stop loss level on the grounds that as long as the trend is not above the chart it will always be in front of the trend line. So if the chart crosses the trend line, we can be sure the price will continue to move away from your position

Cut Loss

Cut loss is to close a position manually to limit losses in trading. The term cut loss like this when you sell at a price lower than the purchase price, so you experience a loss. Literally, cut means cutting and loss means loss, which is an attempt to prevent you from experiencing deeper losses.


Use hedging if available margin is greater than the used margin. If the margin is thin, just use stop loss or all Cut Loss. This is because, cut loss is usually the last choice to limit losses. Whatever way you will choose to limit losses, everything depends on you. Everything requires its own confidence and courage. Do not get because you are hesitant in limiting losses, eventually forced by the broker to close all positions, aka margin calls.