Loss and Profit

Losses

The ability to control losses through the Stop Loss option is a trader’s lifeline. This mechanism helps prevent the complete depletion of your account. You can set a limit on any trade position you open. Acting as a barrier, a controlled loss is a pre-selected price level beyond which you refuse to maintain an open position.

Example:

You open a sell position on EUR/USD at 1.0920 and set a Stop Loss at 1.0880. This means your maximum allowed loss is 40 pips.

Importantly, the placement of a Stop Loss should be based on a specific technical or fundamental analysis of the price chart—not chosen arbitrarily. By selecting a precise price level, you frame your position and limit potential losses. Well-calculated losses are an integral part of Forex trading and do not make you a loser in the long run. Only uncontrolled losses can drain your account and ruin your trading performance.

What if I don’t use Stop Loss?

Your account is always at risk if you don’t use Stop Loss. A single bad trade can cause significant damage. Many beginner traders believe they don’t need Stop Loss because they can close trades manually. This mindset can have disastrous consequences due to the high volatility of the market. In short, a major loss can occur in the blink of an eye.

Taking Profits – The Take Profit Option

Take Profit is the opposite of Stop Loss. Once the price reaches your predefined level, the position closes automatically with a profit.

Example:

You open a buy position on EUR/USD at 1.0920 and set Take Profit at 1.0980, which translates to a 60-pip gain.

Depending on the amount of money allocated per pip, your position will close automatically and secure the profit—whether you are sitting in front of your computer or not.

What if I don’t use Take Profit?

Without a predefined Take Profit, your gains can appear and disappear. Without a clear target, a trade can swing to a large profit or turn into a loss.

Conclusion:

We strongly recommend using Stop Loss and Take Profit. These tools structure your trading positions and make your actions rational and calculated, minimizing risk while maximizing opportunities.