RULE NO. 3: Set you stop loss at 200 pips or no stop loss at all (manually close your trade if your stop loss is approaching 200 pips

‘Stop Loss’: Every new trader is told to use Stop Loss (SL) and Take Profit to manage his risk and increase profitability. The typical advise is ratio of 2:1 (TP 20:SL10; TP40:SL20; TP80;SL 40; etc). Since forex trading starts the position of a loss (i.e. traders’ spreads), the spreads range from 3-9 or even more, most traders setting their stop loss at 10, 20 or even 30 get hit easily. The rules works together, once there is a clear trend, you use the recommended lot size for your account size, Rule No. 3 pips is to insulate your trade against any unusual, unexpected, temporary development. I can assure you that your stop loss will get hit less than 10 out of a 200 trades.


For illustrative purpose, let us look at the chart below using the same example of our hypothetical 3 traders, where they bought at Buy1, Buy2 or Buy3. With their 20-30 SL they got stopped out of the trade, while Trader3 SL was still intact and thus able to ride out the trade to profit.