With some strategies , hedging can be a safer and more reliable way of protecting downside losses than stop losses. Some say that trading with stop losses leads to lax analysis and sloppy trading. Perhaps this is because the trader subconsciously sees the stop loss as a safety net. In the same way that riding a bike with safety stabilizers could make you over-confident as well as more prone to take uncalculated risks.

The trader without stop losses might be more prudent in the choice of trade, money management , and the control and monitoring for the account. This final point is the killer. When the market collapses and liquidity dries up — something that happens from time to time — a trade will exit at the first price it happens to hit. That could be many percentage points away from a stop out level, potentially leaving you with massive losses.

Here are some alternative ways you can protect downside losses without using broker stop losses. It comes with caution though. Omitting stop losses should only be done with full consideration of the risks and after careful testing. With dynamic stop loses you need a piece of software to keep watch on your account such as an expert advisor. The software continually checks the floating losses on open trade positions.

When a loss-limit is reached, one or more of the positions is automatically closed. This limits downside losses on the account. Carry trading has the potential to generate cash flow over the long term. This ebook explains step by step how to create your own carry trading strategy.

It explains the basics to advanced concepts such as hedging and arbitrage. Dynamic stop losses allow for much more flexibility than broker-side stops because the software can apply any logic that you want.

Hedging means that one trade position is covered by another. In a straight hedge for example a long EURUSD position is covered entirely by a short EURUSD position of equal size. The difference between the two determines the profit — but once both trades are in place the profit or loss is locked at that amount. With a more practical hedging strategy a trader would use different currency pairs as well as other instruments to create a basket that has lower volatility with improved risk-adjusted returns.

Ideally they will also use a VAR calculator to estimate the account exposure. This checks the overall effect of hedging between each position in the account. Options can be a great way to protect downside losses in place of stop losses. They do require a bit more planning but once mastered can offer at least as much protection.

With this approach the trader buys out of the money call or put options that will cap the downside losses on one position or even on the entire account. An out of the money put option works like a wide stop loss on a long position. While an out of the money call option works like a wide stop loss on a short position. But options do have a cost even though by using out of the money options this cost is relatively small.

In a worst case scenario if your positions go south the options will pay out and protect against the downside. A scalper for example would look to make only a few pips on each trade.

Each position may only be open for a few minutes or hours. During this time the trader is monitoring it closely and is ready to react if it goes into the red. That is simply to hold a small reserve balance in your trading account. Not surprisingly this is not recommended. That means that your broker may close out your trades at prices that are highly disadvantageous to you.

That may also attract penalty fees. Stop losses might be the right choice for some strategies but not others. As a final point if your risk control relies on your own systems, it is generally best-practice to place wide broker-side stop losses anyway.

These act as a failsafe just in case your other methods fail. Interesting article, thanks. How about position sizing when not using stops? Usually the lot size is derived from the risk, in this case the risk is limitless. Any suggestions?

Start here Strategies Technical Learning Downloads. Cart Login Join. As traders become more experienced, their abilities evolve. Many professional traders reduce their reliance on indicators as their interpretation of the markets becomes instinctive.

Take Price Action traders, for example; they are well known for Forex trading without indicators. Professional traders most likely are using Stop Losses in their strategies, but not in the same way as an average trader would. Professional traders express that their Stop Loss setting tactics allow for plenty of breathing room. In many ways, a Stop Loss takes control away from you. A professional trader objective is actually not to allow their Stop Losses to be triggered but to decide for themselves if their trade is invalid and close it themselves.

Doing this limits how much they lose. Professionals do trade Forex profitably without Stop Loss orders. Still, they can only do that if they are constantly monitoring their account or have a significant amount of available margin to be able to sustain this strategy.

It would never be responsible for anyone to advise Forex traders not to use a Stop Loss. The best advice you can take away from this article is that you should reevaluate how you are deciding where to place your stop losses.

In that case, you should consider decreasing the size of your positions or increasing the margin in your trading account does not necessarily suggest increasing leverage on your account.

Naturally, before you choose to attempt Forex trading without a Stop Loss, you should test this approach on a demo account. When you move to a live account, consider starting on a cent account or by trading Micro-Lots until you can adjust to this bold change and the psychological effects that it may have on you.

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This article will provide you with everything you need to know about Forex trading without a stop-loss. This article will also present you with a no stop-loss Forex strategy that you can use in your trading, as well as, a breakdown of the advantages and disadvantages of these types of strategies.

A successful Forex trader uses a wide variety of trading tools. For example, you can use stop-losses to better protect your account. Just in case you're unfamiliar with the concept, let's explore what stop-loss means. A stop-loss is an order that a Forex trader places on an instrument, which remains until that instrument reaches a specific price, then it automatically executes a sell or buy action, depending on the nature of the initial order buy if it was a short order, sell if it was a buy order.

Setting a stop-loss is particularly useful for removing emotions from your trading decisions, and keeping a constant watch on your positions, so you don't have to. However, you may sometimes hear about traders who trade Forex profitably without a stop-loss. In fact, some traders are opposed to using stop-losses at all. These traders rely on Forex no stop-loss strategy to bring them profit. Some of them do succeed, but the majority don't. Before you decide on whether or not to use a stop-loss strategy, you should consider the advantages and disadvantages of placing stops.

Even then, it would be wise to test out your no stop-loss strategy on a Demo account first, before you use it in the live markets. First off, setting a stop-loss doesn't cost you anything. You will only bear costs when you reach the stop-loss price and the sell or buy. Well, there are always FX traders who don't want to close a losing trade because they think that the market will move in their favour. But the problem is, the markets are not generally known for moving in the favour of individual traders, so trading Forex with no stop-loss is literally like putting emotions over logic.

But keep in mind that stop-loss orders do not guarantee you profit — nor will they make up for a lack of trading discipline. You need to be confident in your trading strategy and stick to your action plan. Before we look at a no stop-loss Forex strategy, let's consider a few things. In a normal FX market, a stop-loss acts as intended.

However, in a fast-moving market where prices change rapidly — the price at which you sell can differ from your stop price. Moreover, a short-term fluctuation may trigger your stop price prematurely. In this case, pick a stop-loss percentage that allows the price to fluctuate. Another common problem is the transparency of stop-loss. There is a game that some market makers play, whereby they run the stops when the price is low enough, then trigger a mass of stop-loss orders.

After an instrument is sold at a popular stop-loss price, it reverses direction and rallies. Please note, Admirals is an execution-STP type broker, meaning that all of its transactions are passed electronically to an execution venue, but without human intervention. Therefore, if you are trading with Admiral Markets, be aware that the aforementioned action can not occur.

Another disadvantage is that you are giving control of your sell order to the the system. In volatile markets, this can cost you money.

This is one of the reasons why some traders think trading without a stop-loss is better. But novice traders should not take this advice right away. Instead, traders should first try to understand what a stop-loss is - by educating themselves on the basics, and then moving onto the strategies.

If you want to trade Forex successfully, you must follow an effective money management strategy. The majority of traders choose to use stop-losses. Yet stop-losses are not always effective, and can often lead to failure for day traders.

If you are willing to attempt trading without a stop-loss, there is a specific no stop-loss Forex strategy.

But please note that despite the similarities between Forex and the stock market — Forex traders rarely use the same strategies as equity traders. To potentially make a return on your investment in the stock market, you could purchase shares and hold them until the fundamentals change.

However, good Forex traders do not simply enter trades based on the results of technical analysis. They also have to consider the underlying economic, financial and fiscal factors.

You can track such economic and financial developments through our Forex calendar. A rule of thumb for trading without a stop-loss is to follow trends. There are two major aspects to the long-term direction of a currency pair — the economic fundamentals, and the country's geopolitical conditions. The fundamentals may include the central bank's interest rate policy, the balance of payments numbers, and the government's political stance.

The standard principle is that if a country's economy is stable, its currency should appreciate against currencies with weaker economies.

Fundamental analysis provides a long-term outlook on a currency. The trader simply has to wait for pullbacks to go long on a specific currency. If a trade goes negative, it can go to a greater degree compared with when high leveraging is in play. However, there are some exceptions to this rule. If a correction is coming, take a small loss by exiting previously negative trades, and reverse positions to take advantage of the changing trend.

If you decide on trading Forex without stop-loss, it is important to use profit-protection strategies. Stops don't just help to prevent losses, they can also protect profits. For instance, let's take the trailing stop-loss as an example. Trailing stop-losses protect profits that are already on the table. When the trade has made significant gains, place a trailing stop between the entry point and the current price action. This allows the current price to continue, in case the market offers more profit.

At the same time, it helps to ensure the trade will not lose money. Next up is the limit order. A limit order exits parts of a trade when the market expects a certain pullback, but does not hit the profit targets. To avoid large losses, many Forex traders use tight stop-losses. However, this frequently ends in multiple small losses that can quickly accumulate. So, is it actually possible to trade Forex profitably without stop-losses? If you want to try a no stop-loss strategy, you have to understand how stop-losses work.

Stop-loss is a popular tool in the Forex trading community, and you can potentially trade profitably without it. Make sure to check out additional trading options with the feature-rich MT4 Supreme Edition trading platform, so you can test out what you've learnt, with all the best tools at your disposal.

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Forex Trading Without Stop-Loss: No Stop-Loss Forex Strategy Admirals Oct 5, 7 Min read. The Advantages of Using Stop-loss Strategies and Methods in Forex Trading First off, setting a stop-loss doesn't cost you anything. Why is this important? The Disadvantages of Using Stop-loss Why do some traders disagree with using stop-losses? Forex No Stop-loss Guides and Strategies If you want to trade Forex successfully, you must follow an effective money management strategy.

Trailing Forex Stop-loss in MT4 Stops don't just help to prevent losses, they can also protect profits. Final Stop-loss Forex Thoughts Stop-loss is a popular tool in the Forex trading community, and you can potentially trade profitably without it.

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Before you decide on whether or not to use a stop-loss strategy, you should consider the advantages and disadvantages of placing stops. Economic Calendar. Grab it now! If you want to try out trading without placing a limit on your losses, in the following guide we will explain how to trade Forex without a stop-loss order, and what strategies you need to use if you plan to have a successful trading session. Moreover, as I explain below your stop losses may not actually be providing you with the protection that you think they are.

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