WHAT ARE TAKE PROFIT AND STOP LOSS?

A stop-loss order is a pending order that traders use to reduce risks. A trader may make a mistake in their interpretation of the market analysis and suffer losses. Based on the state of the market, a trader might set specific risk limits to reduce the amount of potential loss. This can reduce the need for you to spend a lot of time looking at charts and can take emotion out of important trading decisions. You can also walk away from your computer to watch a movie knowing that your risk is limited thanks to a stop-loss order.

An illustration of how to place a Stop-Loss order is given below:

· You place a buy order on the EUR/USD at 1.0605

· Your investment is $500 multiplied by 100.

· Look up the asset's most recent price decrease on the chart to properly place a stop-loss order. Find the lowest cost.

· Your Stop-Loss order needs to be set at roughly 1.0580, slightly below the minimum price.

· Make a transaction with the asset first, then go to My Trades to place a Stop-Loss order for this quote.

· Choose and click on the EUR/USD trade you just opened.

· From the Stop Loss/Take Profit menu, choose Quote.

· Set your preferred value, in this case 1.0580, in the Stop Loss area, and then click Save.

Now, you won't need to spend hours watching your charts or worrying about how the asset's price will fluctuate. Your hazards have been considered and addressed. The Take Profit order, covered in the following lesson, is frequently used in conjunction with the Stop-Loss order for more profitable trades.

A pending order called a “Take Profit” automatically locks in a trader's profit.

Let's say you wish to hold a trade open for a few hours but are unable to constantly watch the price action. Simply place a Take Profit order in this scenario, then go watch a movie with confidence.

Let's say that the asset's price changes favorably while you are viewing the movie.

When an asset hits a favorable rate, a Take Profit order placed in advance will automatically close your position, locking in your profit as you enjoy your movie.

An illustration of how to place a Take Profit order is given below:

· You invest $500 with a multiplier of 100 when you establish a buy position on the EUR/USD at 1.0620.

· For the asset's most recent price peak, look at the chart. In this instance, it is 1.0745.

· Your Take Profit order should be set at roughly 1.0725, just below the maximum price.

· Open a transaction with the asset first, then click to My Trades to place a Take Profit order for this quote.

· Choose and click on the EUR/USD trade you just opened.

· From the Stop Loss/Take Profit menu, choose Quote.

· Set your chosen figure, in this case 1.0725, in the Take Profit area, and then click Save.

Now, you won't need to spend hours watching your charts or worrying about how the asset's price will fluctuate. Your trade will automatically close once your goal profit level has been met, and any profits will be transferred into your trading account right away. Watch that movie and enjoy the popcorn.