"Never trade without an SL" (Stop Loss) is not just a suggestion; it is arguably the most fundamental and non-negotiable rule in responsible forex trading. A Stop Loss is an order placed with a broker to close out a trade automatically when the price reaches a pre-specified level, thereby limiting the maximum potential loss on that trade. Why a Stop Loss is Absolutely Essential: * Capital Preservation: Its primary purpose is to protect your trading capital. Without a Stop Loss, a single adverse market move can wipe out a significant portion, or even all, of your trading account, leading to devastating losses that are difficult, if not impossible, to recover from. * Defined Risk: Before you even enter a trade, a Stop Loss forces you to define your maximum acceptable risk for that particular position. This aligns directly with "cut losses quickly" and helps you adhere to your risk management rules (e.g., risking only 1-2% of your capital per trade). * Emotional Detachment: One of the biggest enemies in trading is emotion. Not having a Stop Loss often leads to "hope trading" – holding onto a losing position in the desperate hope that it will turn around, which usually results in larger losses. An automatic Stop Loss removes this emotional decision-making. * Prevention of Margin Calls/Account Blow-ups: In highly leveraged markets like forex, a sudden sharp move against an unhedged position can trigger a margin call, or worse, lead to your account being liquidated by the broker to prevent negative balance. A Stop Loss acts as your first line of defense against this. * Better Sleep: Knowing that your maximum loss is capped allows you to trade with greater peace of mind, even when you're away from your screens. The Dangers of Trading Without an SL: Ignoring a Stop Loss exposes you to unlimited risk. Black Swan events, unexpected news, or sudden market shifts can cause prices to gap significantly or move violently in one direction. Without a pre-set exit, you could incur losses far beyond what you intended, potentially leaving you with a negative account balance. How to Implement: Always determine your Stop Loss level based on technical analysis (e.g., below a support level, above a resistance level, or based on Average True Range) before you enter a trade. Place the order simultaneously with your entry order. Once set, avoid the temptation to move it further away from your entry price. Trading without a Stop Loss is akin to driving a car without brakes; it's an unnecessary and reckless gamble that, sooner or later, will lead to a crash. It's a fundamental rule that underpins responsible and sustainable trading. #CommunityAMA