The forex market will always be unpredictable. You never truly know how the market is going to move, and prices can change very suddenly. That’s why having a stop-loss can be helpful.
What is a Stop-Loss?
A stop-loss order enables you to exit trades automatically, when a predetermined price is reached. This, in turn, enables you to manage your risk and limit any potential losses. Let’s take a look at an example.
Say you buy EUR/USD at 1.1708 expecting it to rise. With this in mind, you set up a stop loss at 1.1688 which accounts for 20 pips. In the screenshot above, the green dotted line is where you enter the trade., and the red dotted line at 1.1688 is where you set your stop-loss. If the price moves against the trade and reaches the stop loss, then the trade is automatically closed.
How to Set Up A Stop-Loss On MT4
The great thing about M4 is that it’s very user-friendly, and you can set up a stop-loss in just a few easy step. Here’s what you need to do. First, open the MetaTrader 4 platform and find the currency pair you want to trade. Next, double-click on the currency pair and wait for the dialog box to appear. Then, enter you chosen stop-loss and make the trade.
How to Add a Stop Loss To Open Trades
You can also set up a stop-loss for open trades. First, find the relevant trade in your terminal window. Next, right-click on the trade, select ‘modify or delete order’, and wait for the dialog box appear. Then, enter your chosen stop-loss price and click the modify tab to complete the setup.
Knowing how to use a stop-loss order can help you manage risk and minimize any potential losses. It can also help trade more confidently and make more money in the long run.
For more articles about forex trading, take a look at our education section.