To The Moon

Do you know what stops loss? Stops losses are ways to protect profits. You have to understand that if you don’t stop losses then these profits will get lost. What do you think are the best ways to avoid losing money? Should you avoid stop losses at all costs? Or should you take advantage of them? Stop loss trading might seem like a bad idea but actually, it can help you make more money than you would have otherwise if you were not using it. Here are some reasons why you should always use stop losses.

1 – You can minimize risk

Stop losses are a way to minimize risks. If you lose money, you won’t lose everything. You will just lose a small amount compared to what you had originally invested. In case you are wondering how much you can lose, you can find out online. Once you have figured out how much you can lose per trade, you can choose whether to accept those losses or not.

2 – You can maximize your profits

If you use stop losses correctly, you can maximize your profits. Of course, you need to understand how to place stop losses properly to maximize your profits. There are plenty of strategies that you can use to learn about how to place stop losses. One example of a strategy is to sell one contract less than the previous day's close price. When this happens, you will only have to worry about covering your initial investment and not any additional profit.

3 – You can stay focused

When you are involved in long-term investments like stock market, you cannot afford to lose focus. You have to keep an eye on the market and watch trends carefully to know when to buy or sell stocks. Using stop losses makes sure that you do not miss out on anything.

4 – You can control your emotions

You may have heard many people say that emotions rule over reason. Well, they are right! However, you can use your emotions to your advantage. After all, what good does it do to put yourself under pressure and let your emotions get in the way of making profitable trades? Use stop loss to minimize your risks and keep your emotions in check.

5 – You can benefit from margin calls

Margin calls are another tool that traders use to their advantage. These calls allow you to borrow money from a broker to increase the size of your position. Your broker charges interest on this loan. As an investor, you can make money by borrowing funds and selling short contracts. Since you can borrow up to 50% of the total value of your position, you can maximize your potential profits.

6 – You can get rid of useless positions

Some traders have positions where their gains outweigh their losses. While this is great news, it means that there is still room for improvement. Stop losses can help you eliminate unwanted positions. By closing out these positions, you can free up capital and continue focusing on your primary goals.