Gaining an edge in Forex trading is more about knowing the right tools and strategies to use than establishing manual stop losses and break evens. Stop loss strategies are a key aspect of any trader’s risk management arsenal, and the break even level indicator is an essential tool that allows traders to fully take advantage of these strategies. In this article, we look at what Stop Loss and Break even level indicators are, the right time to use them and how to use them to their full potential.
What is a Break Even Level Indicator?
A Break Even Level Indicator is a tool used to help traders to determine a good exit point for a profitable trade. It works by tracking open trades, and automatically moving your stop loss to a break even level once the open trade reaches a certain level of profitability. This ensures that you don’t suffer a loss if market conditions suddenly change.
How to Use the Break Even Level Indicator
The Break Even Level Indicator is relatively easy to use. Simply enter the EA’s magic number in the indicator settings and it will show you only the exposure from the open trades of that particular EA. Then, all you have to do is set your break even level, usually as either a percentage of the profit you’ve made or a fixed loss amount. When your trade reaches this break even level, the indicator will automatically move your stop loss order, so that you will at least break even if the price moves against you.
The Benefits of the Break Even Level Indicator
The biggest advantage of the Break Even Level Indicator is that it allows traders to protect their profits without having to stay constantly plugged into the market. The indicator will automatically move your stop loss when your open trade reaches a pre-set level of profitability, meaning that you don’t have to manually manage it yourself. This also ensures that you can capitalize on profitable trades without worrying about the possibility of them suddenly reversing.
When to Use the Break Even Level Indicator
The Break Even Level Indicator is most effective when used on those trades where you have a high certainty of sustained profitability. For example, it’s a great tool to use when you have identified a strong trend and have already made some profits. The Break Even Level Indicator is also great for those traders who take advantage of multiple EAs in order to maximize their profits.
Using a Break Even Level Indicator is one of the best ways to maximize your trading profits while managing risk. This useful tool allows traders to protect their profits across multiple EAs and automatically moves their stop losses after a certain level of profit is achieved. Ultimately, it’s an effective and automated way to increase profits without running the risk of losing them in case the market unexpectedly shifts.
Understanding The Break-Even Level Indicator in Forex Trading
Forex traders who want to consistently profit from their trading efforts have to understand the concept of break-even level. The break-even level is the point at which a trader no longer incurs a loss on a trade, and is when the trader begins to make a return. To help traders better understand the break-even point, a variety of indicators can be utilized to determine the break-even point. The two most popular indicators for determining the break-even point while trading Forex are momentum indicators and statistical indicators.
Momentum indicators measure the price momentum of a currency pair or security, and can assist traders in pinpointing when their trades are at or near the break-even point. One way to measure momentum is to observe where the price of the security closes relative to the previous price close. For example, if the price of a currency pair on one day is higher than on the previous day, the momentum is said to be increasing. Momentum indicators allow traders to easily identify the break-even level of a currency pair when momentum is increasing. Additionally, momentum indicators can also be used to identify when the break-even level of a currency pair is decreasing.
Statistical indicators are another means of determining the break-even point of a currency pair in Forex trading. Statistical indicators can be used to analyze a variety of different factors, including the current price, average price, and previous prices of a currency pair. Additionally, statistics from other markets can also be used to gain a better understanding of the break-even point of a particular currency pair. The most common statistical indicators used in Forex trading are moving averages, Fibonacci levels, and Bollinger bands.
In conclusion, break-even level indicators provide Forex traders with a powerful tool to identify the break-even points of their transactions. By understanding the concept of the break-even level and utilizing the two most common indicators: momentum and statistical indicators, traders can easily identify when their trades are at the break-even point or near the break-even point. This information can help Forex traders make more profitable decisions and be more successful with their trades, ultimately increasing profits.