There is a trend in Australian Forex Market that deteriorates the business of stop-loss orders. We are not saying there is no market for stop order. Instead it’s slowly declining. While established companies entertain these deals, smaller players abruptly refuse.
They understand it’s easier to say no than to explain. It’s an issue of cost on the one hand and complications on other. These cases are often a part of Australian Dollar currency news and long term forecast.
Where the Problem Lies?
It’s rather complicated because the clients don’t understand the damage a stop-loss could cause. A simple vanilla stop loss means if a stock trade is held at a specific price, it can be quickly sold at a certain price if the broker finds a better deal.
However, a stock trade can lose up to half its value within 24 hours. So you better watch the AMP. The issue is, if a broker processes this stop-loss order in such case despite the content of client, it can lead to a dispute.
The client may say he was fed false information and now that he has bogus, he doesn’t want to sell It and would hold for the rally. Therefore, the client needs to prep himself and accept implications of order, even if the market is disorganized.
How It Works Out?
The broker prefers to keep out of these situations. Now, some brokers work with stop-loss order, but they have their own restrictions on how they work. Do ask questions and get a better understanding of what your stop loss order does and doesn’t do.
Stop loss orders are available in derivative markets, and they have a higher risk on margin, especially when brokers provide loan and don’t need service. This leads to further issues. Most traders in Australian market doesn’t prefer forex stop loss, trailing stop and stop entry orders.
Most traders invest in a timeframe which lets them decide on end of day data. Short-Term traders always have an eye on the market. They have an alert system like SMS, etc.
How Can You Stay Away from Trouble?
The best way to avoid issues in trading is to make a plan and stick to it. This will help you avoid losing trades. So before you place an order, evaluate the technical event and set-up trading. Once you see a position open, you need to adhere to planned exit levels.
Never let emotions divert you from these rules. Cutting losses tells you whether you stay in business or not. If you can’t cut loss, then you need to change your habits, or you get in a financial mess.
Just keep a record of your trades and analyze. It determines why you are failing and helps work on the root of the issue.
Following a pattern will help you understand your success rate and return expectancy. When you invest in trading, you risk losing some money with every trade. So, you need to be careful and make a trade after evaluating the whole trade and possible consequences.