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The importance of stop-loss

Stop-loss plays n important role in trading and usually one of the biggest mistakes of traders is to let losses run while closing profitable positions with small profits.

It is always painful to take a loss, but it is much better to admit a small loss than leave the position open till the loss becomes unmanageable.

Forex, CFDs, commodities etc. are margin-traded products and the leverage can act against you or for you, so small movements in the price of these instruments may result in big profits or big losses.

Therefore money management and risk control are very important for traders in order to be successful.

Thanks to stop-losses, you can limit your risks and hence your possible losses in advance. For example, if you set a stop-loss order 50 points below the price you paid, your loss will be limited to 50 points.