Jayson Yankovsky has 20-year-old experience of trading. Trading in futures, options and currencies since 1987, he is constantly upgrading his knowledge. He is the author of several trading systems, has trained many other successful traders and often publishes the analytical paragraphs in various newsletters. Besides, he has published the book “Trading rules which work”. Twice a day he conducts on-line analysis on the market, ensuring to traders fundamental and technical estimations of a current situation.

Each trader had a bitter experience of placing of stop warrants too close to the market. Actually, it has no significance, whether there was this stop warrant for an exit from lossing or the advantageous bargain, frustration arises, when the stop warrant is executed, and soon after that the market continues to move in the same direction in which the bargain has been concluded.

You have accepted loss which, probably, could turn subsequently to profit, or have reduced the profit. From all aspects which to me were required to be developed at formation of my trading approach, I have possibly spent most of all time for improvement of placing of stop warrants, than for something else. After long considering of this question, I have come to a conclusion that the problem consists not in, whether there should be a stop warrant as trade without restriction of losses is “constant expectation of accident”. Actually, the problem consists in an effective utilization of stop warrants to maximize the probability meant by your trading approach.

I have considered psychology of stop warrants, and I believe that any trader can improve the application of stop warrants simply applying them less aggressively. Here are the rules which I recommend:

1. First of all, you should understand once and for all that stop warrants are not obligatory. The certain way to transfer wearisome recession of the assets is a trade in general without protective stop warrants. In my opinion, it includes “mental stops”.

The purpose of installation of the fixed stop warrant should not be exclusively connected with an exit from the existing bargain. It needs to be considered as a part of the good-thought over trading approach. If we are ready to admit to ourselves that we can not know for certain, whether there will be a given concrete bargain advantageous your use of stop warrants will be simple a recognition of this fact. You, as the serious trader, always should have the protective stop warrant irrespective of, whether you expect that it will be the warrant on an exit from a trading item which at you is opened now for trade during the day.

At least, exhibiting of the stop warrant against your open position guarantees that if, for any reason you drop something before leave the bargain or will exhibit the stop warrant for the night, you will be protected.

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