Part IV: Trade management secrets

Chapter 14: GFC victims didn’t use stops

In this chapter, you will learn that:

• The goal of a stop loss is to protect your initial equity, and to protect any profits you have derived by retaining that position. Thousands of people halved their superannuation accounts during the GFC. I guarantee that 99 per cent of them didn’t use stops. If you’re feeling scarred by the past, you’d better switch off the television, silence the phone and lock your door. You need this chapter, or you’ll suffer the consequences.

• There are three main types of stops — an initial stop, a break-even stop and a trailing stop.

• Learning how to set a stop loss is one of the main priorities in becoming an effective trader. Without ...

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