Stop losses are an essential part of any risk management system because they help traders resist trading on emotions. Whenever you open a trade, you should always set a stop loss. If you stick to your plan and don’t move them, you’ll find you won’t ever let your losses run too long. Remember these rules:
1. A stop loss should be considered and decided before a position is entered.
2. A stop loss should be placed immediately at the time of entry.
3. A stop loss amount should not allow more than a 2% loss of your account balance—for day trades and scalp trades, a stop loss should not allow more than 1% loss of account balance.
Remember these rules and implement them! Good luck and happy trading!
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