as we know in the world of forex trading, we know the terms take profit and stop loss which are often two choices that must be taken, one of them, talking about these two terms is interesting, because not all traders clearly understand the meaning of the two. What’s more, when you start trading you may have to be able to determine whether you want to take profit or make a stop loss. Well, maybe our article today can provide definite answers about the two definitions above. For those of you who are traders who are newbies or beginners, learning to trade is the most difficult thing because unlike other instruments, it doesn’t require a lot of strategy and analysis.
Playing forex trading, the steps are slightly different because you have to be able to choose and decide correctly to achieve the profit according to the target. Stock instruments and mutual funds, you just sit back and the company does the work. Comparable back, according to the value of the profit given. In general, in the world of forex trading, there are several important terms that all traders need to understand well, take profit and stop loss are the most important steps when you are stuck. Not everyone who plays trading wants to lose big, so the risk that must be taken is of course none other than a stop loss, while the others will take “to a minimum” profit. Even though that is the limit of any losses that arise, to the lowest limit that you should get rather than not at all. This understanding is called take profit and stop loss, both of which have the most important function in the world of trading, many traders do not want to lose a lot of losses.
What is Take Profit and Stop Loss?
In a general sense, this stop loss is the lowest value or price limit that is useful for limiting the losses that will be experienced by a trader. It can be said, not all traders are willing to lose large amounts of money, so this position is often ordered by adjusting the market price at that time. Although in general, many brokers provide this feature, in practice many traders are not comfortable with this choice, because like it or not they will limit losses which is actually good, it’s just that when you close this stop loss, you can no longer get a profit if the price is still well corrected. That’s the weakness of this system, as a result the profit you get cannot be maximized and you will only get the smallest value. When viewed from the point of view of its use, stop loss is usually used by novice traders who do not know very well trading strategies, especially in the use of technical and fundamental analysis. Therefore, the use of stop losses will be inversely proportional to those who already understand the world of trading. This stop loss is rarely used by those who have been in the trading world for a long time, because they clearly understand the current market situation and conditions. Another understanding that is almost similar to stop loss is take profit, if in Indonesian it means “take profit” which is more minimal than the maximum, the profit that should be obtained is more than that, but must be limited for fear of price reversal. In fact, if you want to learn this well, the profits can be greater than having to use a take profit strategy. The profit that can be obtained can be greater, but because not all traders can see the profit up front, limiting is actually much better than nothing. It’s true, in the world of trading an accurate strategy is needed if you want to profit. This take profit will work when you have set a profit limit that you will get, automatically if the number has touched the limit you made it will be closed automatically and that is the profit you will get. Worst case scenario, if you take a wrong step, you will certainly lose, but if you have decided well and consider it carefully, we believe that is the most appropriate step for you to take.
Every trader does have a different mindset, they prefer to get large amounts of profit without taking into account the security of their account, even though installing this take profit is to minimize losses and still take profits even though it is said to be “minimal”, at least you have successfully implemented risk management well here. TP will be more realistic if you understand it well. Well, if you have understood the two meanings above, let’s continue on how to use take profit and stop loss below. We hope, after you read this article, you can apply it easily.
The Best Way to Use Stop Loss and Take Profit
For those of you who are still confused about the use of the two terms above, it is important to understand that stop loss and take profit are not the only trading analysis. There are many other trading methods that you can use to secure your account. At least, when you already know the two terms above, it will be easier to apply later. Please see the explanation below.
How to do Stop Loss and Take Profit Manual
First we will learn how to limit losses by closing positions manually on the trading platform you are using, the price is the main determinant when you will make a stop loss, because it is most likely to move in the opposite direction than we expected. For that reason, you can only use a stop loss when you are in doubt about the current price position. Therefore, the use of stop losses must be done in a disciplined manner in order to get the right estimate. An example of this parable of using a stop loss, is to open a long EUR/USD position at the price of 1.2000 and you will close the position if the price moves to 1.2050 (meaning you have made a profit of 50 pips). But when the price drops, you will close the loss at 1.1975 (meaning you will lose 25 pips). The important thing you have to do, must be conscious so that there is no wrong stop loss. This also applies to the use of take profit, when you want to place it you have to pay close attention, for example, buy EUR/USD 1.2000 and you will take profit at 1.2050 then you will close the trand automatically and get (50 pips).
So, those are some things you need to know about take profit and stop loss, hopefully they can be additional material in exploring forex trading. Until here first article from us, thank you for visiting.