Stop Loss and Limit

This short article will help you how to put a "hedge" in your position so that the risks to be limited as far as we want. So is the profit earned can be restricted. The reason why we limit the profit here is because of the nature of the currency itself is highly volatile / fluctuate so that could be the position we are now experiencing gains turn into losses due to exchange rate has moved indigo reversal of what we want.

Now imagine if you are an employee in an office and also invest in forex trading. Let's say you bet on the night and in the afternoon you have to work and not be able to monitor your trading positions. What if when we do not currently monitor our trading positions and prices move opposite to the position moves against us, even too much. It could happen margin call (the closure in a loss position due to lack of collateral margin). Of course this is not our desire.

That is why the facility is provided "hedge" or limit in any forex trading platform. Useful to prevent unpredictable circumstances that affect our trading portfolio so far. The second limit is termed the Stop Loss and Limit.

Stop is willing to limit the losses we endure while the Limit is the limit of the target that we wish to take advantage.

Suppose you had to open a Buy position of GBPUSD at 1.6500 price. Stop Loss ideal is 1.6450. (eg you just want to bear the loss of 50 points only). Take Profit is a great ideal 1.6520 - 1.6550 (ie you only want to benefit / profit 20-50 points only).
Example for Open Sell: Sell USDJPY at 73.00 Example is the Stop Loss at 73.50 and Take profit at 72.50.

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