Forex trading can be a lucrative way of making money, but it is also a risky business. One of the most important things that a forex trader needs to learn is how to manage risk. One way of doing this is by setting a stop loss. A stop loss is an order that is placed with a broker to sell a currency pair when it reaches a certain price. This article will explain how to set a micro forex stop loss.
What is a micro forex stop loss?
A micro forex stop loss is a stop loss order that is placed on a micro lot. A micro lot is the smallest trade size available in forex trading. It is equal to 1,000 units of a currency. A micro forex stop loss is used by traders who are trading with small amounts of money. It is also used by traders who are just starting out in forex trading.
How to set a micro forex stop loss?
Setting a micro forex stop loss is a simple process. There are two types of stop loss orders that can be used in forex trading. They are:
1. Fixed stop loss order
2. Trailing stop loss order
Fixed stop loss order
A fixed stop loss order is an order that is placed with a broker to sell a currency pair when it reaches a certain price. The price at which the order is placed is the stop loss level. The stop loss level is set by the trader based on their risk tolerance. To set a fixed stop loss order, follow these steps:
Step 1: Open a trading platform
Step 2: Choose the currency pair that you want to trade
Step 3: Click on the “Sell” or “Buy” button depending on whether you want to go long or short on the currency pair
Step 4: Enter the trade size (in micro lots) that you want to trade
Step 5: Enter the stop loss level
Step 6: Click on the “Place Order” button
Trailing stop loss order
A trailing stop loss order is an order that is placed with a broker to sell a currency pair when it reaches a certain percentage below the market price. The percentage is set by the trader. The trailing stop loss order moves with the market price. If the market price moves in the trader’s favor, the trailing stop loss order moves up. If the market price moves against the trader, the trailing stop loss order remains at the same level. To set a trailing stop loss order, follow these steps:
Step 1: Open a trading platform
Step 2: Choose the currency pair that you want to trade
Step 3: Click on the “Sell” or “Buy” button depending on whether you want to go long or short on the currency pair
Step 4: Enter the trade size (in micro lots) that you want to trade
Step 5: Enter the trailing stop loss percentage
Step 6: Click on the “Place Order” button
Conclusion
Setting a micro forex stop loss is an essential part of forex trading. It helps to manage risk and protect your capital. There are two types of stop loss orders that can be used in forex trading: fixed stop loss order and trailing stop loss order. The stop loss level is set by the trader based on their risk tolerance. Traders should always remember that setting a stop loss does not guarantee that they will not lose money. However, it does help to limit the amount of money that they can lose.
