Why use a 10 pip stop loss? If you are wondering at all about that
question then you must be a beginner at trading Forex. Any
Forex trader knows to NEVER trade without protective stop
losses. If you trade without stops then your first mistake will be
your last because you might not have any funds left in your
account. A stop is there to protect you from losses, but it is also
there to help you make money.
If you trade to gain 20 pips while risking only 10 that means you
are trading with a 2:1 risk ratio. It’s like you and I are playing a
game where I flip a regular coin many times, and our bet is that if
it lands on heads I’ll give you $20, but if it lands on tails you give
me $10. You would be foolish not to join me in this bet, as you
should come out ahead (though with the Amazing Forex System
your odds are better than a 50/50 coin toss).
Another reason to use a stop is that it could go wrong. It does
happen sometimes and you need to be prepared. The price could
go one way just far enough to trigger your order then turn around
and skyrocket the other way (whiplash). How would you feel
losing 30 or more pips in just a couple of minutes? Not fun. It
does happen that you get triggered the wrong way. Oh well, you
lost 10 pips, usually you make it back when it triggers the other
entry order and keeps going that way, or you can make it up in
the next trading opportunity. Losses are a part a trader’s life; the
trick is to limit your losses and let your gains run, not the other
way around.
One amazing thing about this strategy is that you are only risking
10 pips in your trade. Most traders usually have stops of 20 to
100 pips, and so would consider a 10 pip stop a very safe trade
On another note, in the above trading strategy I was assuming
that your Forex broker is giving you a 5 pip spread, if for the
currency pair you have a greater-than 5 pip spread then you
should not add/subtract 10 pips but rather use 15 pips or more.
This is because you could get triggered into the trade too soon,
and possibly for the wrong direction if the high/low of the 8:30am
candle were to go 3 or 4 pips higher/lower than the previous. You
understand of course that the broker enters you at a 3 or 5 pip
loss as part of their spread (this is how they make money) and so
you may need to compensate for a higher pip spread. If you are
trading “exotic” currency pairs (not recommended at all) that have
higher pip spreads then you may want to further compensate how
many pips you add/subtract, but definitely try this with a demo
account first as I’m not sure how well that will work.
You are trading a very tight window because realistically what is
happening is that if it goes 5 pips towards your set entry price you
get triggered into the trade due to the 5 pip spread your broker
gives. If your broker offers you a 3 pip spreads on some of the
major currencies then continue using the same strategy feeling
good that it should work better for you, as you will get falsely
triggered less often.
Please remember that when I’m talking about 8:30am candles
that this is just for illustration purposes. Your time zone may
differ, and the time of the announcements occur at different times.
I am only using 8:30am for the sake of convenience as a
reference point for this course as this is the time I personally do
most of my trades (but at least 3 times a week I wake up in the
middle of the night for 15 minutes to trade this system).
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