What is Stop Loss and Take Profit

There are two extremely important trading aspects on Forex. This is Take Profit and Stop Loss. We’ll talk about them today. In this article, you will learn about protective orders and transaction planning.

TakeProfit and StopLoss appear as fundamental concepts in forex trading in the financial markets, each trader cannot do without them.

There are two auxiliary orders in the markets necessary for fixing profits and reducing losses. These are TakeProfit and StopLoss, they are combined with market orders and pending.

A stop order, also called a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. Stop-loss orders are designed to limit an investor’s loss on a position in a security and are different from stop-limit orders. When a stock falls below the stop price the order becomes a market order and it executes at the next available price. 

Let's get acquainted with their installation in MT4 

As an example, we suggest considering a transaction that is open in one lot of EUR / USD. Log in to the terminal to continue. Then find the VIEW section. Next, you see the TRADE section with a list of open transactions. We can also go to LOSS or PROFIT. After that, set Take profit / Stop loss, since at this level they are not yet installed

In order to set everything right, you need to go to the chart and move the trading instrument there. Next we find Time-Frame 1D. Here, one candlestick - one day, the chart generally shows about a year of fluctuation in market prices.

The opening point is a dashed line in green. Right-click on the order. Limit losses in the following way: SETTINGS-MODIFY.

Next, you should specify the Take Profit / Stop Loss parameters on the chart from the market price. We write, for example, in cell 500 or 1000.

If you are familiar with the concept of a fractional lot, then you know that it is 5-digit, and not 4-digit, as usual.

This means that the MT4 value looks like this: 500 is 50 points, and 1000 is 100 points.

Next, COPY, and put Stop Loss, that is, 50 points from the current price, and Take Profit, which means 100 points of the same price.

If you pay attention to the chart, you will see that here the Stop loss or Take profit levels are shown here with a dashed red line.

This means that at the lower border - Stop loss (loss = 50 p. Or $ 500), and at the upper border - profit (100 p. Or $ 1000)

Obviously, reaching this level and getting profit is quite possible, even if you are completely inexperienced in transactions or vice versa, you have achieved certain results. Therefore, this knowledge will be needed at any level. This knowledge will certainly help you with forex trading.