To maximize your profits in Forex trading, you don’t have to trade a standard account; not every beginning trader can afford to. Instead, if you believe you have a good forecast on the market, you can trade more than one lot. To continue the above example, if your successful trade earned you two hundred pips and you had purchased five lots of that currency, in a mini account you would have put up $500 of your own money—but earned a profit of $1,000 (two hundred pips times five lots). In a standard account, you would have put up $5,000—and earned $10,000.
A stop, also called a stop-loss, is a pre-arranged point where you decide you would like to get out of a losing trade. A limit, also called a take-profit, is a pre-arranged point where you decide you would like to exit a winning trade. Although it may not seem so on the surface, both are important. Properly using stops and limits defines the extent of your risk and encourages disciplined trading.
By Infinitech Trading Team
You enjoyed it, Share it!