Forex Stop Loss, Take Profit & Trailing Stop

stop loss in forex trading
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About Stop Loss, Take profit & Trailing Stop

Stop Loss and Take Profit are the two most important terms for order execution in forex trading. The two order commands are essential for cutting your loss and catching a good profit. The stop-loss allows you to determine at what price you want to cut your losing trades and take profit to allow you to enter the expected price level that you would like to close a position with a profit. There are other important terms trailing stop here the details that could be helpful for beginner traders. In some cases, for better risk management is a good idea to use trailing stops. By this, we can save many profit points when the price turns around. 

What YOU Will Learn – 

1.      What is the stop loss in forex?
2.      What is Take Profit?
3.      How to find the perfect take profit price?
4.      What is Trailing Stop?
5.      Trailing Stop for Long Term Trade

What Is The Stop Loss in Forex?

The stop loss should be implemented into the trade every time you get entry the market. A stop-loss prevents getting negative in a control, it triggers a close order of a losing position before your account balance is exhausted. So trade without a stop loss as doing so is like risking your entire account balance in a trade. So need to set a stop loss value that should how much % risk you want to take for the specific trade.

If you are going to buy a lot of GBP / USD but did not want to lose more than $ 300 in this single operation, you must set your stop loss of 30 pips below the price at which it entered the trade. If you buy GBP / USD to 1.50 USD, you want to enter a stop loss at $ 1.4970, thus avoiding a loss of more than $ 300.

Stop-loss order execution differs depending on order types so the calculation above not as exact when the order type is a sale. Sometimes, you set 30 PIPs to stop but without reaching the price here your trade close to hitting stop loss. You simply stop out from the trade through the trade is profitable … it’s most disappointing.

What Is The Take Profit in Forex Trading?

Take Profit is the opposite of a stop loss. Taking profits is a price you would like to close your position for a profit, above or below the current price of the currency. As a stop loss, you can enter this command, either during the initial entry to buy a currency, or later, and can be changed at any time.

how to set trailing stop

How to find out perfect Take profit

As you may have understood, take profit is very interesting if you can determine the value or the percentage optimally. However, this exercise is more difficult than it sounds. The level at which this order will be activated depends on what you want to risk and the trading strategy, but we must point out that a decision must be based, above all, on a good technical analysis of the market.

More specifically, and to determine an optimal take profit, we can base ourselves, for example, on the signs given by the technical support and resistance, which are stabilization zones for prices. Thus, traders who have taken a sell order generally choose to place their take profit just above the support line. If their order is for buy, they can place it just below the resistance line.

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What is The Trailing Stop?

” Don’t lose the Profit” this the basic concept of using a trailing stop in our trading. The trailing stop is a different type of stop-loss order that needs to implement in money management. Stops or stop-outs are intended to protect your capital, but if you put them aggressively close to the price, they tend to clean up your account little by little as you are stopped over and over again.

Sometimes this is difficult to understand for the beginner that that how the trailing stop work? Depending on the market condition or strategy need to use trailing stops to lock your profits earlier. The trailing stop is the current price in the amount specified.

Trailing Stop in Long Term

For a long position in a currency, a trailing stop is placed below the current price and increments by pips as the price advances. If the price decreases and reaches the trailing stop, then a stop-loss order is activated and the position is closed.  The main function of the “trailing stop” is to increase your profit lock as the market moves, without the need for you to intervene and adjust. The “trailing stop” function allows you to follow trends according to your comfort level. This way, you don’t have to constantly monitor the operation. For this reason, 2 Take profit is required for our long term signals.

That’s all the details about the Stop Loss Take Profit & Trailing Stop.

To know how to calculate your stop price wisely Read the article – Placing The Proper Stop Loss to Avoid False Trigger