Stop Order

A stop order is an instruction to buy or sell a currency pair once it reaches a specific price, aimed at limiting potential losses or locking in profits.

What is a stop order? 

A stop order is an order placed with a broker to buy or sell once the price of a currency pair reaches a specified level. There are two types of stop orders: buy stop orders and sell stop orders. A buy stop order is placed above the current market price, while a sell stop order is placed below the current market price.

Once the specified price is reached, the stop order becomes a market order and is executed at the best available price. Stop orders are used by traders to limit their losses or protect their profits in a volatile market.

Example of a stop order 

Assuming, you are long on the EUR/USD currency pair at 1.1500, but you want to limit your potential losses. You can place a stop order at 1.1400, which means that if the price falls to 1.1400, your long position will be automatically closed, helping to limit your losses.

This allows you to manage risk and protect your investment in the forex market.

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