I wanted to take the time to talk to you about forex stops and how to do them effectively. You have to be able to not lose money. That’s a skill most people don’t go after. They’re more interested in earning money, but they don’t learn how to protect it. It’s a sad state of affairs, but it’s the reality of the forex business and the people looking to get rich.

You have to remember your main priority as a trader. You want to preserve as much trading capital as you can. It’s not bad trades that cause the problems, it’s the ones that bleed us of capital. When it is a bad trade, you know when it’s time to stop. When it’s something that is bleeding, you’re not sure. You know it’s down, but you think to yourself that it might go back up. It might recover.

You need to preserve capital and that means you have to use forex stops. The key to this is being objective. Most people aren’t objective enough. They’re emotionally involved in a trade and they can’t make a good decision in the heat of the trade. You should recognize that, instead of ignoring it.

I’ve found that the best time to implement forex stops is before I make the trade. I decide when I’ve had enough before I buy. All you have to ask yourself is this: “If it goes down, at what point will I sell?” It’s objective and easy to follow.