| Stop Order |
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This type of order will help you manage your risk by preventing one trade from wiping out an account. This order automatically closes your entire position at the best available price once a certain price is reached. A Stop-Loss order can only be set at a price less favourable than the current price. Example: If you buy the EUR/USD at 1.47739 and want the position to close automatically if it moves 100 pips against you, you would set a Stop-Loss order at 1.46739. (If you are short, you would set the Stop order above the current price, e.g., at 1.48739.) To Set a Stop-Loss Order: When you open your trade with a Market or Entry order, click on the Advanced bar:
Alternate route: You can also enter a Stop-Loss order by selecting a trade in the "Open Positions" window, and clicking on the "Stop" button of the desired open position.
Once a Stop has been set, you will see the Stop price in the Stop column in the "Open Positions" window.
If the Close price touches 1.49380, the entire trade will be automatically closed, with the loss subtracted from your balance. Dynamic Trailing Stop The trailing stop feature allows traders to place a stop loss order, which automatically updates to lock in profit while the market moves in your favor. Trailing stops can be placed by clicking the advanced button in the Create Market Order, Create Entry Order, or Stop Order window. Please keep in mind that this feature does not protect against losses. Trailing stops in the FX Trading Station are dynamic, meaning they continually follow the market as it moves in your favor, even when the market moves only 1/10th of a pip. To set a trailing stop, you must first set a stop. This is the initial level where your stop order will start from. To make the stop order a trailing stop, simply check the Trailing Stop box. Then, for every 1/10th of a pip the market moves in your favor, the stop will move the same amount. So, if you bought, your stop will move up when the currency pair rises. If you sold, your stop will move down when the currency pair falls. Example: The EUR/USD then rises by 30.2 pips to 1.5522(3) with every single 0.1 of a pip, your stop automatically moves up to Re-Cap of Trade Market Order: 1.5492(1) with Stop 1.5472(1) If Market goes up 30.2 pips on EUR/USD 1.5492(1) + 30(2) New Market Price 1.5522(3) Then the new stop price with Dynamic Trade Stop will be: 1.5472(1) + 30(2) New Stop Price 1.5502(3)
While Trailing Stops do not protect against losses, the goal is to lock in your profits when the market moves in your favor. Important: Pay attention to your stop price. Stop Distance You also have the ability to place stops and limits in terms of pips as opposed to setting specific price levels. Limits will be relative to the market opening price at the time the trade was opened. Stops will be relative to the market offsetting price at the time the trade was opened. The difference between the opening price and the offsetting price is the spread. When buying, the open price is the ask, and the offsetting price is the bid. When selling, the open price is the bid, and the offsetting price is the ask. This logic is in place to prevent you from being stopped or limited out inside the spread if slippage occurs when you are trading with tight stops and limits. Note: If you set a 10 pip stop using the Stop Distance feature, you are setting a stop 10 pips from the offsetting price PLUS the prevailing spread at the time was opened. See examples below.
Example 1: Entry Order to buy 10K EUR/USD at 1.4500. Stop 50 pips, Limit 50 pips. (1.4497 bid "offsetting" price / 1.4500 ask "open" price). ■ Limit = 1.4550 (50 pips above 1.4500, the open/ask price). If touched $50 profit. ■ Stop = 1.4447 (50 pips below 1.4497, the offsetting/bid price). If touched $53 loss. (In this example, this loss incorporates the 3 pip spread (3 USD) when the trade was activated and filled, this being your transaction cost for the trade. The spread is your cost of transaction on any trade. Example 2: Entry Order to sell 10K EUR/USD at 1.4500. Stop 50 pips, Limit 50 pips. (1.4500 bid "open" price / 1.4503 ask "offsetting" price). ■ Limit = 1.4450 (50 pips below 1.4500 the open/bid price). If touched $50 profit. ■ Stop = 1.4553 (50 pips above 1.4503 the offsetting/ask price). If touched $53 loss. Example 3: Entry Order to buy 20K GBP/USD 1.6500. Stop 50 pips, Limit 50 pips. (1.6497 bid "offsetting" price) / 1.6500 ask "open" price) ■ Limit = 1.6550 (50 pips above 1.6500 the open/ask price). If touched $100 profit ($50 x 2 lots) ■ Stop = 1.6447 (50 pips below 1.6497, the offsetting/bid price). If touched $106 loss ($50 x 2 lots) Example 4: Entry Order to buy 10K GBP/USD 1.6500. Stop 50 pips, Limit 50 pips. (1.6502 bid "close" price) / 1.6505 ask "open" price) ■ Limit = 1.6555 (50 pips above 1.6505, the open/ask price). If touched $50 profit. ■ Stop = 1.6452 (50 pips below 1.6502, the close/bid price). If touched $53 loss. |
