MetaTrader 4 - Using a Stop

Trading without using a Stop is like jumping out of a plane without using a parachute!

I will strongly urge you to always use a Stop when trading, as there can be very strong and sudden moves at times, which may lead to huge losses if you are not protected.

You can minimize your risk and / or safeguard your profits

by using a Stop when in a trade!

A Stop is an order that you can enter where a trade will be closed the moment that the market touch that level.

To activate a Stop:

It is possible to activate a stop even before you enter a trade!

Press the F9 key to open the Order Window:

Decide where you'd like to put the stop and enter the value into the Stop Loss block.

Please note: At the start of a trade the Stop Loss value will always be behind the entry:

• If you plan to activate a Buy transaction (= you believe that the market will move upwards for the duration of the trade), the Stop Loss will be below the entry of the trade.

• If you plan to activate a Sell transaction (= you believe that the market will move downwards for the duration of the trade), the Stop Loss will be above the entry of the trade.

You can activate a Stop any time after you entered (activated) a trade!

The Order Window will appear:

Click on the Red Button to enter the Stop Value into the Stop Loss block.

You may now change the value of the Stop Loss by using the up and down arrows, or by typing in the new value for the Stop Loss.

When finished, click the Blue Modify Bar at the bottom of this screen.

You may move the stop to a new position whenever you want by following the procedure explained above.

• Double-click in the S/L block of the active trade to get to the Order Window and change the value in the Stop Loss block to the new value.

• Click the Blue Modify Bar to confirm and finalize the new value for the Stop.

Where is the best place to put my Stop?

This is a question that I hear quite often.

If it is too close to the market, you may be stopped out too quickly, and if it is too far away, you may lose a huge amount of pips when the market change direction.

The best place will be determined by your strategy and money management.

Many people will use a fixed number of pips for the size or distance of the Stop. The number will be determined by the timeframe that they use - the larger the timeframe, the larger the size of the Stop.

Others will calculate the distance of the Stop according to their money management system.

For example: You are willing to risk 1% of the money in the account on the Stop -

• If you traded with 1% of the money in the account, then you can place the Stop 100 pips away from the entry.

• If you traded with 2% of the money in the account, then you can place the Stop 50 pips away from the entry.

• If you traded with 5% of the money in the account, then you can place the Stop 20 pips away from the entry.

• If you traded with 10% of the money in the account, then you can place the Stop 10 pips away from the entry. This is too close under most cirumstances. You will have to increase the amount you are willing to risk.

It is very important that there must be a healthy balance between the amount of pips (money) you risk and the profit potential of a trade. If the losses are larger than the profits, your account will be empty in a short while!

Some traders prefer to use the Fractals indicator as an indication of where to put their Stop.

This indicator will plot an arrow whenever a new high or low position has been identified.

In a Sell trade you will move the Stop to the new Fractal on top of the candles.

In a Buy trade you will move the Stop to the new Fractal at the bottom of the candles.

During training I will explain the best places for the placing of a Stop!