Are you aware of stop loss and how to take profit in the forex market? As a beginner, you may not be aware of this, but these two orders play a very important role in forex maarket. The Forex trading may prove quite risky if proper management is not followed in an effective way. Similarly, if you don’t make the use of forex stop loss and take profit in a proper way, it would be difficult for you to make a profit in this highly volatile market.

Here, in this article, you will get proper information on how to use stop loss take profit forex orders in the trading business. But before you proceed towards this direction, you should first know how forex market is traded.

How Forex market is traded?

The Forex market follows an order which enters into the current market price. This order is termed as Market price. While entering an order if the market price gets to a certain level, it is called entry price.

Since the forex market is highly volatile, you should not be tempted by the currency movements to enter into the trade. You must keep patience and analyze the market carefully before making any investment.

How to use stop loss and take profit in forex?

These two orders simply mean how you enter and exit the forex market. In the forex market, you may find different types of orders which often make it confusing for the traders to understand properly. It is important that you must know the ins and outs of each type of order to make money in the currency market.

One of the simplest types of forex order is the market order, called MO. MO is applied when you enter and exit the market at the current price. To define it in simple terms, let’s cite an example here. Suppose, you are observing the charts and decide that you would like to buy EUR/USD and for this, you press the Buy button, and you will enter the trading market.

The same thing goes for selling as well. You are watching the fluctuating rate of EUR/USD and decide this is the right time to exit, and thereby you press the Sell button and exit the trading market at the present market price.

But what will you do if you can’t keep an eye on fluctuating market in every minute? What will you do if you would like to do something else in the trading market?

This is the place where forex stop loss and take profit come into play. For example, you can make the use of stop loss at a certain currency value when you would exit. Say, you bought EUR/USD at the price range of 1.3000. You put stop loss order at the market value of 1.2900. Therefore, when the market price of the trading value reach 1.2900, your exit order will close automatically, and you will suffer 100 pip loss.


Therefore, to place forex stop loss and take profit orders in an effective way, you must know how you can use these orders in an effective way. You must develop a trading plan so that you can analyze when you can get out of the market. And if you don’t learn to use these orders, surely, you will get more surprises and most of them will prove bad.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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