Control the risk
Currency trading is risky and, as we have seen, margin trading can greatly expand both positive and negative returns. Forex demands constant vigilance and does not take easily to the human condition that requires time for food, rest, comfort breaks “and recreation.
Orders that are executed immediately at current rates are known as market securities. However, there are a number of switches that can be triggered at predetermined prices which can be deployed to monitor the decrease and consolidate the benefits:
Stop loss: An order to close a position automatically when you press the bid price or offer a certain level.
If you have a long position, you can issue a stop order below the current exchange rate. If the market price falls through the stop loss trigger price, then the order will be activated and your long position will be closed automatically.
If you have a short position, then you must set your stop above the current price to be activated when the key price to the trigger level.
A “trailing stop loss” is one that is fitted behind a position as it moves into profit. This is a good strategy for the immobilization of gains. Increasing the trigger price stop loss position becomes more profitable, the operator can make the most of the gains of the paper is performed if the market turns down.
For a long position, the stop loss will be set below the market spread and limit sell order above the market spread. If the basic offenses exchange rate threshold to limit then the position will be automatically sold and is no longer the need for the stop loss will be canceled. Otherwise, if the price falls to trigger stop loss, then the position will be closed and there will be no need to limit order.
For a short position, the stop loss is set above the market spread and limit order below. If the exchange rate rises stop loss trigger price, then the position will be closed and the limit order will be canceled. If the exchange rate and the trigger price limit order, the limit order will be activated, the position will be redeemed and the stop loss will be canceled.