The $5.3 billion forex market hates uncertainty. Even a heavily anticipated event like the monthly release of non-farm payroll numbers can turn the market upside down. However, sudden “breaking news” has the potential to wreak complete havoc. That is the main reason why you should always set a stop loss. It is your safety net. Without a stop loss, your forex account is in perpetual danger of being wiped out by an unanticipated news event.
Mr. Jordan Lindsey, the founder of JCL Capital, has advised forex traders for several years, of the mindset needed to achieve financial independence through trading forex. His approach is counterintuitive to many traders who see forex trading as a way of making fast money. That plan will never work in the forex market. In fact, the market regularly crushes such dreamers as though it were a law of physics to do so.
Jordan Lindsey is fond of telling traders to stick to their plans. Thus they will stick to their goals. A trading plan must take into account many factors, not the least of which is breaking news. Macroeconomics falls under the category of what is known as fundamental analysis. Any news event which can disrupt the worldwide economic system would be considered a significant driver of prices in the forex market. Traders owe it to themselves to have a plan in place for how they will handle such events. The conservative approach would be to exit the market and wait for things to cool off.
Jordan Lindsey advises that traders think like investors and savers. As such, the prudent approach is to manage your trading account to preserve your capital. Traders must remember that trading is all about managing risk. Alternatively, it is more important to protect your profits than it is to try and earn more. A wise trader looks at every trading opportunity as if it were a car sitting on a lot of a used car dealer. You can buy the car if you dare but don’t blame the dealer when you get the shocking news that your car needs a new engine. Word of the unexpected has a way of suddenly materializing out of the blue, so always be on guard for it.