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Enhance your trading knowledge by studying our legendary free online program!
  • Beginner
  • Intermediate
  • Advanced
  • Completion
  1. Beginner
    Early Stages For Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Intermediate
    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
  6. Technical Analysis
    13 Topics
  7. Advanced
    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

Stop Loss and Take Profit

You didn’t think the forex market came with no perks did you? Let me introduce you to what could be your new best friends. Using both are KEY in keeping your risk low, and securing those profits. Not to mention, they allow you to place trades and leave them running while you focus on your day to day tasks.

Our trades aren’t always going to go in the direction we had hoped they would, which is why it’s crucial to use a STOP LOSS. In doing so, we are essentially picking the price point where we want our trade to exit out of if the trade goes the wrong way.

If we’re in a trade for a sell at 1.25000 and the market goes to 1.24800, we’re currently up 20 pips because we sold the pair, and price dropped. If price immediately reverses and heads towards 1.26000, we are currently losing about 100 pips (the money depends on the lot size x the number of pips you’re winning/losing). Instead of having a drawdown of 100 pips, you can set your stop loss to IMMEDIATELY get you out of the trade the moment you’re losing 30 pips. So it doesn’t matter if you’re playing basketball or watching Netflix, the VERY SECOND you’re losing 30 pips, your broker will close your trade for you without you having to check your phone!

It doesn’t necessarily have to be the lowest price point, take this illustration below for example.

Stop Loss

Moving on to where we’re able to make our profits without having to stare at the charts 24/7. That’s right! You don’t need to be watching your trade play out the entire time just to ensure you make money!

Once you’ve marked up your chart, and determined a bias for your pair, you will then figure out your TAKE PROFIT. This is a price point where you want your trade to exit out if the market decides to go in the direction you predicted. It can be decided based on how you like to trade, your goals based on the pip count, or your R:R.

Essentially meaning if you’re out and about, but you want your broker to close the trade for you whenever you’re making $1000, or $2000, or $500, the minute you’re floating profit gets to that, your broker will close your trade because your take profit has been hit.