This article looks at the capping of your foreign exchange Singapore profits and losses.
When you trade on the foreign exchange Singapore you should consider the capping of your profits and losses. There are a lot of traders who consider the capping of their losses, but few who consider the capping of their profits. You should consider why this is the case. You also need to look at the ways that you can cap your profits and losses as well as the reasons why you would want to do this.
Why Profit Capping is Not Considered
There are a number of reasons why traders generally do not consider the capping of their trading profits. The primary reason is that you will be limiting the profits that you are able to make. This is something that most traders find counter-productive to the entire idea of trading. These traders are going to be looking to make the largest profit possible on the market.
The Ways You Cap Foreign Exchange Singapore Losses
All traders should know about the ways that you can cap your foreign exchange Singapore losses. The most common way that this is done is through the use of stop loss orders. When you use a stop loss order you are going to be limiting the amount of loss that you make on a single trade.
Where you place the stop loss order will vary depending on the risk management plan that you have and the type of trading that you are doing. There are some trading strategies that call for the stop loss order to be places at a certain point. However, there are more strategies that do not have a set place for your stop loss order. When you use the latter you will have to consider the logical placement of your stop loss.
Some traders feel that the logical placement is a set number of pips from their entry point. There are other traders who will use their loss per trade amount to determine where to place the stop loss. When you use this method you will place the stop loss order at the point where you have made your maximum loss per trade.
The Capping of Your Profits
There are a lot of traders who do not want to cap their profits. This is due to the fact that you are limiting the returns you are able to make. However, there are benefits that you can get from the capping of your profits. The primary benefit is that you would not have to worry about the trade turning and you losing all of your profits. Of course, you are only able to receive this benefit if you are able to set your profit cap correctly.
The most common way that this is done is through the use of a take profit order. The take profit order is similar to a stop loss order, but works with your profits instead of your losses. There are a number of ways that you can go about setting the take profit order. The first is a set number of pips that you can to make as a profit. The second is through the analysis that you complete on the market.