Forex 101 ยท Day 5/30: Stop-Loss and Take-Profit โ Two Things You Should Decide Before Opening a Position
Yesterday (Day 4) we talked about โfirst decide how much youโre willing to lose, then decide your position size.โ Today we turn this logic into two concrete actions: stop-loss and take-profit.
โ Why stop-loss must be set โbeforeโ you open
If you try to set a stop-loss after entering, emotions have already stepped into the trade:
ยท If price rises, you donโt want to sellโyouโre afraid youโll miss more
ยท If price falls, you donโt dare to cutโyou donโt want to admit you were wrong
The result is often: a small loss drags into a severe injury.
Discipline must be enforced while youโre still not โout of your mind.โ
โก How to set stop-loss (example)
ยท Account: $1000, per-trade risk 1% โ max loss is $10
ยท Assume stop-loss is 30 points, and 1 standard lot = 30 points = $300
ยท Position size = $10 รท $300 โ 0.03 lots (if the account is small, open 0.01 lots)
The order is always: decide how much youโll lose โ calculate position size โ open the trade. If you swap the order, youโre gambling.
โข Three common ways to take-profit
ยท Fixed points: take profit and exit after 50 points
ยท Risk-reward 1:2: stop-loss 30 points, target 60 pointsโso you earn more than you risk
ยท Trailing stop-loss: once youโre in profit, move the stop-loss up to your entry price to at least avoid a loss
No method is always right. What matters is: set the rules first, then execute.
โฃ Crypto comparison
The contract
$BTC applies the same way: before entering, place your stop-loss order in advance.
Keep per-trade risk under 1โ2% of the account. The logic is exactly the same as forex.
Crypto markets move more violently, so stop-loss is even more important.
Tomorrow weโll cover: economic data releases โ the same Non-Farm Payrolls data, why do some people profit while others lose?
The market involves risk; trade cautiously.
#ๅคๆฑ #Forex #risk management