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What Is Spread, Stop Loss and Take Profit?

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Spread:

If you open a trade you will find that the trade will be open to some extent. That’s what spreads. Forex brokers deduct this fee as commission or charge for opening a trade.

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

Different payer spreads are different. Again the spread of brokers may be less. For example, the spread of EURUSD in Instaforex is 3 pips. But the spread of EURUSD on Fxoptimax is 2 pips. Spreads on some pairs may be up to 30 pips or more. So before trading unfamiliar pairs, the spread should be seen.

Stop Loss and Take Profit:

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

Take Profit: Take Profit, you can decide the price you want to close the trade on your profit.

Suppose you open a by-trade open at 1.3540 You want to gain 50 pips and do not lose more than 50 pips. Then you can set 50 pips stop loss and 50 pips take profit. If your computer is shut down or a spike suddenly increases or decreases in value, your trade will automatically close at the price of stop-loss or tech profit.

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