Forex Stock Exchange Forum
Would you like to react to this message? Create an account in a few clicks or log in to continue.
Forex Stock Exchange Forum

Forum About Trading on Forex,Stock,Binary Options, CryptoCurrency and NFTs

Cyborg Pro

Hulk trading robot

Predator trading robot

You are not connected. Please login or register

Hedging Risks and Rewards

Go down  Message [Page 1 of 1]

1attention Hedging Risks and Rewards Tue Nov 10, 2015 7:51 pm



Forex trading is a risky business. This chapter will explain the usage of Stop Loss (SL) and Take Profit (TP) orders. These are used for hedging your risks and rewards, realizing your profits and minimizing your losses.

eToro places an automatic Stop Loss order on all your trades to prevent you from losing more than you’ve invested. If the rate of your open trade drops below what’s covered by your investment, the trade is closed by the automatic Stop Loss. This means the maximum amount you can lose on a trade is almost always limited to the initial investment of the trade.

Still, there is no reason why you should wait until you lose your entire investment to close the trade. By setting a Stop Loss order you make sure that the value of your trade doesn’t drop below a certain level. This way you control the maximum amount that you are willing to lose on a trade, without having to monitor each trade around the clock.

Take Profit orders are similar to stop loss orders, only referring to profits. Take Profit orders make sure that once your trade reaches a certain level of profit it will be closed.

For instance, imagine that you’ve opened a Long EUR/USD trade for at the rate of 1.5400. After a few hours the rate rises to 1.5500, but an hour later drops to 1.5300. Without a Take Profit order, you might miss the rise in the rate, and end up with a loss on your hands.

If you had set a Take Profit order, the potential profit of the trade would have been realized, without you having to monitor the trade around the clock.

Remember, Stop Loss and Take Profit orders are very simple tools that can make the difference between a successful trading career and a big hole in your pocket. Consider using these orders with every trade that you make.

next: [You must be registered and logged in to see this link.]

[You must be registered and logged in to see this image.]

eToro (Europe) Ltd., a Financial Services Company authorized and regulated by the Cyprus Securities Exchange Commission (CySEC) under the license # 109/10. eToro (UK) Ltd, a Financial Services Company authorised and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263

risk warning:CFDs are leveraged products. Trading in CFDs related to foreign exchange, commodities,indices and other underlying variables, carries a high level of risk and can result in the loss of all of your investment.

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum