eToro – Forex Trading Forum

[Forex101]

"Order" refers to the way you enter or exit a trade, there are several types of orders but I am going to concentrate on the 2 basic orders eToro offers:
Take Profit
Take profit (TP) is a specific type of market order, it is used to close a position once your profit has reached the desired level. For example, if the EUR/USD is currently trading at 1.544 and you want to trade. Now let's assume that you are at work and you can't stay in front of the screen all day, so you are afraid that it will reach 1.574 and then drop back down so you'd lose all your profits – in that case you want the program to close the position once it reaches a certain profit
Stop-loss
Stop loss (SL) is first and foremost an order that is designed to protect you from losses if the price goes against you. There are 2 types of stop loss in eToro:
1) The first one is user defined and it's basically the opposite of TP , when you open a position you can choose an exit point for the position. i.e., if you buy EUR/USD and the price drops 10 pips you can tell the system to close the position in order to avoid bigger losses.
2) The 2nd type is automatic; eToro has an automatic SL that come into action when you reach a loss of 100% of your initial investment.
This makes a lot of sense when you think of it, if you open a position for $25 and the price goes against you, you lose $5, then you lose $15, and if the automatic stop loss will not kick in at -$25 and the price continues to go against you, you can lose $100 over the $25 you invested.
So auto stop loss protects you by limiting your loss to the amount you first risked. That is quite useful!

So, SL and TP are two mechanisms which let you plan your trade and then continue to do other things. Whether it is going to work or seeing a movie – you can be sure that your trade has specified limits, both on the profits and losses.

Have fun trading!

[annet1983]

i sometimes dont put stopp loss , i know its risky, but that way i give more room for market to move and eventually it goes in direction i want it to!