Can You Trade Forex Without a Stop Loss?

Never trade without a stop loss. Even when trading with no leverage.
Share on facebook
Share on google
Share on twitter
Share on linkedin
can you trade forex without a stop loss
Giles Coghlan
Follow me
Latest posts by Giles Coghlan (see all)

Trade Forex Without a Stop Loss

Hi traders, just had an important question from Mark in the subs. Can we ever justify trading without stops if our conviction is strong?

Mark’s point is that given that sometimes we see large swings in price that can prematurely take our ass out of a trade unnecessarily? Could we actually justify trading without stops if we have a strong conviction? Well, the first thing to say is no.


What Percentage Should You Risk On A Trade?

How Important Is The Risk To Reward Ratio?

How To Reduce Risk On a Trade?

How To Reduce Anxiety When Holding Open Trades?

Where Should Day Traders Put Their Stop Loss?

We can never justify trading without stops. And the reason for that, is because if there is an unexpected market event and remember, unexpected market events can and do occur. Then if you don’t have a stop-loss, then it’s possible to your tray to run two three four, 500 points upwards against you.

So say this RP just popped out, make a cup of tea or you went to do something in the garden. Then you come back and all of a sudden prices move 500 plus points against you. Those kinds of events, although rare can and do occur, and therefore, that’s why we always, always want to use our stop even when our conviction is strong.

Now Mark you, have a point if swings can take us out of the market by surprise, then we don’t want to run a stop too tight. So in this example here, this is not a strong conviction trade at all, but it is our dominant currency sentiment for the day.

The Australian US dollar upside, we’re expecting bias from support, and we can see price sort of hankering around that area. And it’s just worth covering it because I haven’t done a video for the last few minutes. So equity markets are still up.

We have bond yields still up. We are seeing strength across the commodity block with the Aussie Canadian dollar New Zealand dollar broadly up on the day. We have Japanese yen and Swiss franc, broad weakness, and a little bit of US dollar mixed bag with the US dollar. But the general picture is we are still risk on.

Just then looking at the commodity space, we can see the oil is up towards the highs of the day.

Looking at copper, just move that down to 30 minutes, we can see that copper is at the highs of the day as well.

So that’s broadly all supporting our positive bias towards the Aussie US dollar, although it’s a weak conviction. So in this scenario, and where we place our stops, we don’t want to run our stops very tight because you might suddenly see some swipe price action. Which is what Mark’s saying – there’s a sudden whip in price and then price moves back to where it originally was. So therefore leave your stop outside of the price for this current moment.

So you know, somewhere six to 40, would be a good place to keep your stop. Because it’s just outside of the current movement, you’re not likely to get whipped out.

So Mark what you wanna do, is have a kind of midway point. You want to give you a stop-loss big enough so you don’t get taken out by an unnecessary movements.

But you do want to have a stop-loss, because when you get an unexpected market event you won’t have that reassurance that you will be taken out of the market. You know, even if you’re thinking wrong, I’m just gonna sit there all the time. Sometimes, the computer breaks, you get a loss of power supply, the cat jumps on the keyboard, those kinds of things.

Anything can, unexpectedly conspire against you as it were. So, just by using a stop-loss, you have that extra peace of mind that if the worst should happen, it’s not as bad as it possibly could have been.


Learn to trade confidently and independently. Trade to the live heartbeat of the Forex Market in realtime.  Never miss a beat!

0 0 vote
Article Rating




A Financial Source subscription is just $97 per month. Cancel in two clicks.
*Limited offer. Normally $247.
Notify of
Inline Feedbacks
View all comments