In foreign exchange trading, the techniques of stopping profit and loss are often mentioned. However, many people find that even after reading so many principles, they still do not set profit and stop loss and do not trade.
What to do?
Today, FW Rongyu Financial Xiaobian collates some common knowledge of profit and loss in trading, crumbled, broke apart and dissected, hoping to help you understand the reason, better understand the reason, and really flexible use.
1. What is Foreign exchange stop-loss?
Stop-loss is when a certain investment losses reach a predetermined amount, in order to avoid the formation of a larger loss.
The goal is to limit losses to a small range when investments go wrong.
In forex trading, a stop loss really means that the stop price set by the trader will not be penetrated and the stop area will be protected by the market.
When the market price approaches the stop loss zone, the market will reverse;
When the market price breaks through the stop loss zone, then the market must trigger the stop loss, the price will go higher, the price will go lower.
I believe that investors in foreign exchange trading have experienced this kind of experience: after selecting a pair of currencies, placing an order and setting a stop loss, if the exchange rate drops sharply, they will quickly cut their losses and leave the market. Watching the exchange rate continue to fall, they will feel glad that they have stopped their losses and entered the market.
But sometimes you get another situation, the exact opposite, where after a stop loss, the exchange rate suddenly bounces back so much that you can’t buy it again, and it bounces back higher than you originally set.
After a few such times, the trader will have no concept of stop loss and will have a lucky bet that the exchange rate has fallen so far that there will be a rebound and sooner or later it will return to above the purchase level.
But when the currency continues to fall and traders fail to cut their losses in time, heavy losses can occur.
Ii. What is Foreign exchange return?
Forex stop profit is to stop profit, that is, to reach a certain profit on the liquidation of positions, described as good.
The opposite concept of a forex stop is a forex stop, where a loss reaches a certain level and the position is closed. This is called “cutting meat” by traders.
Although foreign exchange stop profit and foreign exchange stop loss are two relative concepts, their functions are the same. They are used to prevent risks and control risks to a minimum.
So how to set the surplus?
The setting method of stopping profit in foreign exchange trading is very simple. When a trader uses mt4 software to create a new order, there will be a profit price. The corresponding value set by the trader is the stop profit level of the order.
