Lesson2-9 – Hirose Financial

Forex Academy:
Middle School

Duration:
5 minutes

Lesson 9

How to close Buy and Sell positions

Main Points

What is a Take Profit order?
What is a Stop Loss order?
How to decide on Take Profit and Stop Loss orders?

What is a Take Profit order?

In Lesson 8 of the Middle School level,
we introduced you to the Take Profit order as a convenient way to place orders.
Click here to learn more about Take Profit in Lesson 8 of the Middle School level.

Let’s review “Take Profit order”.
You are holding a Buy position.

The question is,do you need to keep monitoring the chart until the price goes up?
If you have studied Lesson 8 of Middle School level, you definitely know the answer.
The answer is: If you place a Take Profit order, you do not need to keep monitoring the chart.

Example of USD/VND Take Profit order

Set a Take Profit order at 23,000 VND.
When the price increases to 23,000, the Take Profit order will be automatically activated and your order will be closed.
You don’t need to constantly look at the chart to make a profit!!!

What is a Stop Loss order?

The opposite of a Take Profit order is a Stop Loss order.
Let’s review the Take Profit order chart.

A Take profit order is a preset order placed at a price higher than the price at which you placed your Buy order.

In contrast, a Stop Loss order is an preset order placed at a price lower than the price at which you placed your Buy order.

Question: Why do I have to place a stop loss order?

In Forex trading, Stop Loss is considered very important.

In Forex, there are only 2 orders, Buy and Sell, so even if you know nothing,
your winning rate is still 50%.
However, if your winning rate increases by just 1%, you will still end up making a profit.

For that reason, you have the possibility of winning and also the possibility of losing.

However, how you lose is what matters.

I will explain it to you with the following example.
Imagine you have 100 USD in your account balance.

If you lose $20

No problem. Just make a profit of $20 or more on your next trade.

If you lose $100

Your account balance will turn to 0 and you will no longer be able to trade.

With just one loss, you have completely lost the opportunity to make a profit.

If you place a Stop Loss order, the trade that you are losing in can be autmoatically closed.
Placing a stop order is very important as it can prevent you from making significant losses in a single trade.

How to decide what price to set on take profit and stop loss orders.

Rest assured.
Hirose will provide you with daily Market Forecasts so that anyone can easily set Take Profit and Stop Loss orders.

Market Forecasts are provided exclusively to customers with Live accounts at Hirose.
Please contact HIROSE VIETNAM via Zalo to receive information about our Market Forecasts.

Use the market forecasts to determine your Take Profit and Stop Loss prices.

Depending on the order you are holding, set your Take Profit and Stop Loss orders as follows.

If you are holding a Buy position

You will make a profit if you close the order at a price higher than the purchase price. You will make a loss if you close the order at a price lower than the purchase price. Take Profit and Stop Loss orders will be placed as follows.

If you are holding a Sell position.

You will make a profit if you close the order at a price lower than the price you sold. You will make a loss if you close the order at a price higher than the price you sold. Take Profit and Stop Loss orders will be placed as follows.