Stop-Loss Caveats

Stop-Loss Caveats
A frequent mishap with stop placement however, is that traders too often place their stop orders directly on key support/resistance levels. The rationale for this is understandable, support and resistance areas where price action usually stalls thus if the markets moves to that level it is unlikely to trade through. But it is not uncommon to see the market trade down to key support levels and then reverse back in the trader favor. Whether the source of this frequent misfortune is Interbank FX dealers or trader psychology stops are often better place just beyond such key support/resistance levels.

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