Stop/Limit Orders

After your entry order is placed, you can set a stop and limit order
if you desire to. Stop and limits are both ways to exit a trade after
the trade is entered. You may also not place a stop or limit order if
you are going to monitor the trade (recommended for the 4xtrend
trader). Stop and limit orders are used if you have entered a trade
and cannot monitor it afterward. A stop order is used to stop losses.
A limit order is used to redeem profits. Stops and limits depend on
the direction of the entry order. Assume that you placed an entry
order to BUY EUR/USD for 1.6100. An example of a stop order
would be an order to sell at 1.6081. If the stop order were executed
you would lose 19 pips. The limit order for the same trade could be
for somewhere around 1.6171, if the limit order were executed you
would have made 71 pips. Now assume that you placed an entry
order to SELL EUR/USD for 1.6500. If the stop order was for
1.6530, you would buy back the currency at a loss of 30 pips if the
currency traded at the stop price. If the limit order was 1.6420,
then the EUR/USD would be purchased back when it traded at
1.6420 for a profit of 80 pips. Here is a diagram of where the
appropriate stop/limit orders are placed in relation to the type of
trade you are placing. The green represents buying and the red
represents selling. Notice how the stop/limit orders undo the entry
order.