Is a stop loss required?

No, using a stop loss is not mandatory at Pivex. We encourage traders to use them, but it is ultimately up to each individual’s trading strategy.

That said, most of our consistently successful users do use stop losses, and for good reason.

What is a Stop Loss?

A stop loss is an order placed with your broker to buy or sell once the price of an asset reaches a certain point. It is a tool used to limit potential losses by automatically closing a position when the price moves against the trader.

Why Use a Stop Loss?

Stop losses are an essential risk management tool. They prevent traders from losing too much on a single trade, helping them manage the amount of capital at risk. Without stop losses, traders might let their positions run too long and incur significant losses, which could jeopardize their account balance and violate the drawdown limits.

Example:

If you are trading the EUR/USD pair and you place a stop loss at 1.2000, your position will automatically close if the price hits that level, limiting your loss. If the price moves against you and hits your stop loss at 1.2000, you will prevent further loss.