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Stoploss Techniques

Why 'Stop-loss' is important?

The chart pattern below is a Descending Triangle formed in the EURGBP pair on September 28th, 21 in the 30 minute time frame.

Descending Triangle

A Descending Triangle is a bearish chart pattern created in technical analysis by connecting a series of lower highs with one trend line and a series of lows with a second horizontal trend line.

Explanation :

     
       Forex pair  : EURGBP
       Time frame  : 30 min. (28 Sep'21)
       Pattern     : Descending Triangle
       Signal      : Descending Triangle. gives bearish signal
       Expectation : price will fall (↓)
       Position    : Short
       Reality     : appreciation in price (↑)
       Result      : Stoploss hit 
                     (loss with 1:7 risk reward ratio)
       Lesson      : Trade with confirmation 
                     (respect your stoploss, 
                     no revenge trading)
       Ideal entry : Breakout & Retest, 
                     when support become resistance
      

The trade, as shown in the chart, goes against your strategy. To protect your capital, you must use a technique known as stop-loss.