Futures Knowledge - Using Stop Orders

	Futures ResearchQuotes & ChartsFree GuidesBook StoreEducation CenterTrading ToolsResources
	Research a BrokerOptions TradingSystem TradingElectronic TradingForex TradingManaged Accounts

file:///C:/MEDIA_~3/FK_NEW/include/content_vert_right.asp

	Forex Trading
Intro to Forex Trading History of Forex Difference of Forex vs. FUTURES Difference of Forex vs. STOCKS Forex Benefits Reading Prices Dealing on Bids/Offers Using Market Orders Using Stop Orders Using Limit Orders Roll Overs Speculating Risk Awareness Managing Risk

	Other Forex Resources
Using Currency Futures to Hedge Currency Risk CME $ Index Overview Forex Tips (Audio/Slide Show Presentation)

Home > Forex > Using Stop Orders
Article By Rick Thachuk
World Link Futures

Stop orders are most often used as a risk management tool to close a position if prices move adversely. Unlike a market order which is executed immediately, a stop order is contingent on the price. In other words, a stop order is only executed when the current bid or offer reaches a specific stop price as set by the trader. Stop orders to buy deal on the quoted offer and must be set at a price that is above the current offer. Stop orders to sell deal on the quoted bid and must be set at a price that is below the current bid. Stop orders are assumed to be good-till-cancelled meaning that they will operate day after day until filled or until they are cancelled by the trader.

For example, say that a trader who believes that the British pound will strengthen against the U.S. dollar has just bought a mini contract at 1.8333. If the British pound weakens, the trader will lose money. The trader wants to limit loss to $65. Since every pip (minimum price fluctuation) of this mini contract is worth $1, the trader will enter a stop order to sell one GBP/USD mini contract at 1.8268. Now, if the GBP/USD bid ever drops to 1.8268, then the stop order will be filled and this will close the British pound position.

Let's look at a stop order to buy. Say that a trader who believes that the British pound will weaken against the U.S. dollar has just sold a mini contract at 1.8329. If the British pound strengthens, the trader will lose money. The trader wants to limit loss to $65. Since every pip is worth $1, the trader will enter a stop order to buy one GBP/USD mini contract at 1.8394. Now, if the GBP/USD offer ever rises to 1.8394, then the stop order will be filled and this will close the British pound position.

Home > Forex > Using Stop Orders

file:///C:/MEDIA_~3/FK_NEW/include/content_vert_right.asp

	Premium Services
Free Weekly Email Free Monthly Offers Quotes & Charts Online Library Home Study Courses

	Marketplace Links

	Special Book Offer

Research and Commentary:		Education:	Resources:
Currencies Research	Indices Research	Bookstore	Contract Specs
Energies Research	Meats Research	Free Guides	C.O.T. Reports
Financials Research	Metals Research	Glossary of Terms	Exchanges
Grains Research	Softs Research	Online Course: Intro to Futures	Expirations
.	.	Online Library	FuturEmail
			Links
Research a Broker:			Quotes & Charts
Broker of the Month	Online Brokers	Contact FuturesKnowledge	Ticker Symbols
Discount Brokers	Options Brokers	About FuturesKnowledge	Trade Shows & Seminars
Full Service Brokers	Forex Brokers	Advertise on FuturesKnowledge	Traders Tax Help
			Weather Forecasting

DISCLAIMER: Futures Trading involves a huge risk of financial loss! FuturesKnowledge.com is a traders research and resource site - and is not meant to be used as a guide for trading. Due to the large risk involved - we highly recommend that you consult with a number of different resources before attempting to invest in the futures, commodities, options, or any other market we report on.