Many new traders often say that they are doing everything correctly but still, their trades are being stopped out. This currency market is extremely volatile in nature and just by following the rules in the book you can never make any profit. If you want to really lead your life based on trading, then you need to bring some changes to your thoughts and imaginations. By following the traditional way of trading you can never really make a profit. Though this market can be traded in the lower time frame still the professional traders in the United Kingdom prefer higher time frame trading. You might say that in the higher time frame you have to use wide stop loss and take huge amount risk but if you follow some simple tips then you can easily change your way of trading. It’s true that you will have to use wide stop loss but still, at the end of the day, you will realize that this is the best way to trade the market. So let’s learn how to use the wide stop loss in an efficient way.
Scale your lot size
Scaling down the lot size is very important for the long-term positional trader. If you think that you can trade with a big lot and use with a stop loss, then you are just one step away from losing all trading account. You need to learn the basic lot size calculation so that you can easily place your trade with low risk. In the eyes of many trained professional scaling down the lot size is one of the essential elements to make profit consistently. However, if you are new to this market then things will be a little bit complicated for you. So we highly recommended you to use the demo trading account to develop lot size calculation without risking any real money.
Use price action signal to set your stop loss
Some traders often set their stop loss based on the imaginary number and some use indicators reading to do this. But both of this system is totally incorrect. Support and resistance levels are the most important element for setting up the stop loss in your online trading account. But along with the support and resistance level if you use price action confirmation signal then you can easily reduce your wide stop loss by 20 -30 pips. Price action trading is nothing but the study of the raw price data and execution of the trade. But being new to this industry mastering the price action trading skill will be a little bit hectic for you especially if you have a weak base in your trading knowledge. But if you go through the online trading resources then within a few months you can easily master this system and use a wide stop loss in an effective way.
Use of higher time frame data
If you become a full-time trader, then make sure that you do your technical analysis in the higher timeframe. Some expert traders in the United Kingdom often trade the market in the lower time frame but still, they do their technical analysis in the higher timeframe. The short timeframe is very useful for precise trade entry. For instance, if you spot any bullish trading signal in the higher time frame then instead of executing your trades at that very movement you can wait for a minor retracement and trade the market in the lower timeframe. To be precise you need to look for price action confirmation signal in your lower time frame to trade the higher time frame trading signal. This type of market analysis is often known as multiple time frame analysis and it is one of the best ways to use the wide stop loss. But no matter what you do make sure that you are not taking more then3% in any single trade.