PROFIT TARGET, STOP LOSS, TRAILING STOP
on this occasion, we will learn about the gains and losses is by using profit targets, stop loss and trailing stop control.
What is the target profit?
The target result is an order to automatically liquidate a position at a certain price when we got a number of benefits.
when open positions Buy the profit target is located in the price when you buy the open positions
Example :. Buy EUR / USD at 1.00, the target profit at 1.2050 (with a target of 50 points profit)
When you sell the profit target is located BELOW opening price positioning Sale / Short
Example :. Sell EUR / USD 1.2050, the target profit at 1.00 (target of 50 points profit)
which is a loss Stop?
Stop Loss is an order to liquidate a position automatically at a certain price to limit losses that could occur if the market moves against our predictions.
when open positions Buy then the stop loss is below the price you currently open positions open Buy
Example :. Buy EUR / USD at 1.2050, stop loss at 1.00 (stop loss loss of 50 points)
If you open the stop loss selling is priced at open positions Sell it
Example :. Sell EUR / USD 1.00, stop loss at 1.2050 (stop loss loss of 50 points)
Stop Loss may also serve to protect the benefits you got (locking profits). The trick is to elevate the position of stop loss (to buy) or lower the stop loss position (for sale), when the position we are always open being a profit running.
What is a trailing stop?
Trailing Stop is a facility provided by the forex broker that can change the stop loss to lock in profits automatically in multiples of a certain amount. Trailing Stop is the development of a stop loss.
Trailing Stop is generally only works when the position of the operator A PROFIT MORE THAN MINIMUM OF CERTAIN predetermined broker (eg a minimum of 15 points).
So if you take advantage more than the minimum amount you set a trailing stop, that its position is always DANGER (unless you used a stop loss). So you have to set a stop loss at first and then, if necessary, can be added as an additional feature trailing stop. Using this feature you will avoid the loss if your profits above the minimum trailing stop
Example :.
Buy EUR / USD at 1.2050, stop loss at 1.00, Trailing Stop 15 points
When prices. IDB now at 1.2070 (20 points profit) then the trailing stop will adjust stop loss to 1.2055 (20 points profit was reduced by 15 points). This means that your profits have dilock 5 points (on a new stop loss is at 1.2055).
Thus, when the price falls to 1.2055 then automatically terlikudasi take 5 points. This means that you are unlikely loss because it was locked again.
But if prices do not fall, but prices continue to rise from 1.2050 to 1.2095 (45 points profit), then the trailing stop will adjust stop loss at 1.2080 price ( 45 points profit 15 points less, the benefit +30 points). That means your profits dilock 30 points (on a new position of stop loss is at 1.2080).
