An unbending, unbreakable rule is to never add to your losses. Forex strategies that tell you to add to a loss or to change your stop loss to prevent the position from closing are wrong. Worse than being wrong, these strategies are downright lying. Adding to a losing position is not going to make you recoup any losses sustained so far. Dropping the stop loss down further to prevent the close of the order will not help the market turn around and bring your losses back. Whether you have read to the contrary or have this gut feeling that this one unbreakable rule is incorrect- stop. You do not want to go any further in the market if you cannot admit that a loss is a loss that should be cut short rather than compounded.
Forex Strategies that Work Better
Set a stop loss or trailing stop on your open order. Calculate the amount of AUD funds you are willing to lose if the market reacts opposite to your position. No one wants to lose; however, the market sometimes moves against you anyway. You have to expect losses and learn how to deal with them to succeed with any of the forex strategies you may learn. It can be a hard lesson, but it is an indispensible one.
Never lower your stop loss to keep the position from closing. Set the stop loss and let it ride. If you find a mistake in your order execution such as the wrong stop loss or new forex fundamentals came out supporting a move in the opposite direction, close the position. Closing early does mean a deviation; however, it prevents further loss when you know there is a mistake or change to market reality. Forex strategies simply do not want you to add to a losing position or move your stop loss to create a situation of more loss.
A trailing stop loss is often better than a regular stop loss because it moves with the rate. When the rate moves in a profitable direction, your trailing stop loss follows. For example a rate of .9870 that moves to .9970 is profitable if you bought the base currency. You decided a loss of .0020 was acceptable, thus you put the trailing stop at .0020 from the current market price all according to forex strategies suggestions. Since the price went to .9970, your stop loss is at .9950. The profit for the day was only to .9970. When .9950 is reached your position automatically closes.
Forex Strategies Losing a Little Profit
It is an unpredictable market where you do not know the cap for the currency rates for any given day. It is better to leave some profit behind than to be too greedy. A trailing stop loss that enacted 20 off the high for the day is not a loss but a win of a specific profit target. In forex strategies you need a profit target as well as a target loss to ensure the best trade scenario.