What is a stop order and how can I open it on Exness MT4/MT5? Table of Contents

Stop orders are one of the types of limit orders you set up to make your order profitable, allowing traders to see if market trends are profitable.

There are many types of stop orders.

  • Buy Stop: Buy at a price higher than the current ask price.
  • Sell ​​Stop: Sell at a price lower than the current bid price.
  • Stop Loss: When a trading position falls, it ends at the specified price.

How to open a stop order?

  1. Log in to MT4/MT5.
  2. Double-click on the selected product to open a new order.
  3. Change the order type to limit order.
  4. Then select Sell Stop or Buy Stop for Order Type/Type.
  5. Set the request price. If you receive an invalid SL/TP message, make sure you are set within the range of valid parameters and click Set.
  6. A stop order setting complete message appears.
  7. Next, double-click on the order in the Transactions tab to open the order settings, set the stop loss price, and click Edit to complete the operation.
  8. Congratulations. You have set up a stop order with stop loss.

If you want to edit stop orders, including stop-loss, you can simply double-click on the order in the Transactions tab to open the customization window.

If you choose an expiration date for the weekend, be aware that your order will expire before the market closes at the end of the week.

Go to EXNESS Official Website

Why is Stop Loss important?

We know that you trade because you want to make money and because you like challenges.

We also know that the story of huge profits in trading is inspiring. However, it is said that losses in others can make people sickly addicted.

Here we will share some of the biggest trading losses in history, and then see how to manage losses, learn lessons, and move on.

1. German Metal Company in 1993

As early as 1993, German Metal Company, a German trading company, lost 1.3 billion U.S. dollars in oil futures transactions. Under the management of CEO Heinz Schimmelbusch, the company went long in the oil futures market, and as a result, oil prices fell rapidly. They did not stop trading but continued to buy as the price fell until they were finally on the verge of bankruptcy, and they were forced to accept a loss of $1.3 billion. Robert Citron One year later, in 1994, Robert Citron lost even more in a series of highly leveraged bond investments. At the time, Citron was the head of finance and investment in Orange County, California, and conducted a series of transactions including repurchase agreements and floating-rate notes. Citron’s bet interest rates remain low, but as interest rates rose, Citron lost trading, and its fund eventually suffered a huge loss of $1.7 billion, forcing them to file for bankruptcy.

2. UBS Group in 2011

UBS Group In 2011, Kweku Adoboli of UBS Group was sentenced to jail for unauthorized transactions, and his company UBS Group lost 2.3 billion U.S. dollars as a result. Kweku Adoboli, who was only 31 years old at the time, had been illegally engaged in exchange-traded fund transactions and accumulated huge losses. He kept concealing these losses from UBS until he was finally discovered. JPMorgan Chase & Co. In 2012, Bruno Iksil (remember him? “London Whale”) caused JPMorgan Chase to suffer a huge loss of US$2 billion in the credit default swap market, and it became the focus of attention for all the wrong reasons. As a result, JPMorgan Chase CEO Jamie Dimon was forced to testify before the U.S. Senate Banking Committee and the House of Representatives Financial Services Committee.

How to deal with losses?

The first thing to understand is that losses are inevitable and an inevitable part of trading. Therefore, traders should not think that there is a way to avoid losses but should focus on managing losses to ensure that any loss cannot destroy their trading account. Be sure to use the appropriate position size. If your strategy has a good risk-reward ratio (which means you gain more than you lose in any transaction), then a conservative position size of 1% per transaction is enough to bring substantial returns. Although some novice traders believe that the larger the position, the greater the profit, but they do not realize that this may also lead to greater losses. When trading, protecting funds and continuity should be the focus. With a position size of 5% per transaction, only 20 consecutive losses can make you liquidate your position, while at an interest rate of 1% per transaction, you need to lose 100 consecutive trades to liquidate your position. This will provide more buffer and security. The next step is to use a stop loss in the transaction. Setting a stop loss means that you can guarantee to leave the market with a predetermined loss. This enables you to calculate the trading risk and ensure that it is within your limits. The risk of trading without a stop loss is extremely high. In extreme cases, if the market trend is not good for the trader, the trader may close the position in a transaction. Once the stop loss is set, do not move. Many novice traders mistakenly adjust the stop loss farther because they don’t want to be stopped. However, doing so will only lead to greater losses. The next step is to ensure that if a trade ends with a loss if it starts to move in the direction you expected, do not increase the loss by re-entering the market. Many novice traders made this mistake and eventually turned a losing trade into two or three losses. So, if you follow these rules and make sure to follow your trading plan, I hope you will never see your name on the list of the biggest trading losses. Similarly, if you are in a position with a loss of $1 billion from the start, congratulations.