What is Stop Loss, Take Profit and Pips?

Stop Loss

A stop loss should be entered for each and every trade you ever make on the foreign exchange market. A stop order is a way to protect ourselves in the worst-case scenario. It would never be recommended to trade without a stop loss as doing so is like risking your entire account balance on one trade.
Setting it at a distance of -20 pips, means that for this particular trade we won’t be losing more that.

Take Profits

Take profit orders are the opposite of a stop loss. The take profit is a price at which you would like to close your position for a profit. Take profit (or limit) order is a way to somehow “save” your profits Just like a stop loss, you can enter this order either during your initial entry to buy a currency, or after, and it can be changed at any time.


The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point - for most pairs this is the equivalent of 1/100 of one percent, or one basis point.
Example EURUSD 1.4324 raise 10 pips will give 1.4334.
For buy trade, with stop loss of 100 pips, will give 1.4234.
For buy trade, with take profit of 50 pips, will give 1.4384.

Example GBPUSD 1.5882 drop 20 pips will give 1.5862.
For Sell trade, with stop loss of 80 pips, will give 1.5942.
For Sell trade, with take profit of 40 pips, will give 1.5822.

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