Spread, Stop Loss and Take Profit

Posted by: | Posted on 4:29:00 PM | Post Categories

 Spread:

If you open a trade, you will see that the trade will open with some loss. This is called spread. Forex brokers deduct this fee as a commission or charge for opening a trade.


Suppose you buy GBPUSD at 1.7445, but it will open at 1.7449, which means 3 pips fee is applicable. If you open a trade with a value of $ 1 pips, the trade will open at a loss of $ 3.

Different pair spreads are different. Again, the spread may be more or less different brokers. For example, the spread of EURUSD on Instaforex is 3 pips. But the spread of EURUSD on Fxoptimax is 2 pips. In some pairs the spread can be up to 30 pips or more. So before trading unfamiliar pairs, you should look at the spread.
 

Stop Loss and Take Profit


Stop loss: With stop loss, you can decide at what price you want to close the trade in your loss.

Take profit: With take profit, you can decide at what price you want to close the trade in your profit.

Suppose you open a buy trade at 1.3540. You want to gain 50 pips and not lose more than 50 pips. Then you can set 50 pips stop loss and 50 pips take profit. If your computer shuts down or a spike causes the price to rise or fall suddenly, your trade will automatically close at a stop loss or take profit price.

 

 


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