December 3, 2022
Trades In Forex

We’d all like to keep our trades profitable in the Forex market. Profitability is often measured by quantifying the final outcome in a profit versus loss case. Yet, this measure cannot be, by itself, sufficient to sustain our motivation. All traders will have to incur a loss at some point before they earn a profit. Hence, if you approach the market with the sole intention of just making a profit, it may in fact lead to losses and cut down your chances of success. It’s a chain basically–you want to profit, you incur a loss, and you then are disappointed and thus feel emotional about it. Now the trick is in the way you handle the emotions that pave your way to success. Visit multibank group

What is a break-even price?

A break-even price refers to the sum of money or value change for which an asset needs to be sold in order to make up for the cost incurred to acquire and own the asset. It is even used to denote the money a product or service needs to be sold to make up for the manufacturing costs. 

Break-even refers to the point where you’re unable to make a profit or loss. It is even referred to as the price at which you open a trade. If you speak about it in terms of price action, it is the level of trade recovery. 

For instance, when you purchase GBP/USD at 1.4050 and shut the position at 1.4050, there’s no gain or loss. Some traders prefer to keep their initial stop loss price the same as the original entry price if the present rate is going in their favor.

Calculating break-even

The break-even price is technically the sum of monetary receipts which equals the total monetary contributions. When sales match costs, the associated transactions are known to break even, where one makes no loss or profit. To come to the break-even price, you only need the amount of the total cost of a business or financial transaction as the target price at which you sell the product, service, or asset, or trade a financial instrument to break even.

Breakeven % = (Stop Loss / (Profit Target + Stop Loss)) x 100

Breakeven Forex trades

Move away from the typical profit and loss paradigm which drives most trades and understand that somewhere in between the realm of profits and losses is a gray area where the trader can take a break–it’s a neutral zone represented by the number 0 (zero). Needless to mention you have to move the negative numbers of losing trades to the side of winning trades. But when you have trades that break even, the outcome in fact is quite good. A key advantage of break-even trades is that your capital is intact and you can try to risk it for another better opportunity. Breaking even is when you’re sustaining, you may not be praised for it but at least you’re not making a loss. It is important to see how to reach the break-even point.

If the 0 (zero) entry on the trading log is an outcome of a loss incurred from a trade that was profitable at first, it could be an indicator of a trader’s observation that the market conditions have changed and it is better to exit the market. Yet another fact is that a break-even trade could be the result of an immediate exit by a trader who was apprehensive about a possible loss. A considerable number of such break-even trades in one’s account could reveal a telling tale about how overwhelmed they may feel due to market conditions. It leads to devastating emotions like anxiety, guilt, fear, or greed. We’re all well aware of how common such an experience is. But remember that break-even trades could be an excellent opportunity to progress as a trader. 

Do not get attached to your trade

Even a couple of best trading methods have a win ratio of just more than 50% or even lower! Most trades barely break even. Each flat or losing trade maintains your streak in the game. Traders find themselves in trouble when they keep holding onto a losing trade and do not respond to the signals that tell them to let go.

However, you will find a better and much more effective approach. If we look at the way we see the forex market and move our mental and emotional focus, it can look like a galore of profit-making opportunities. The ones who take this chance aren’t anticipating pips to be handed over but they wish to get better at identifying the winning price action patterns. Pips or profits turn into what we earn on the basis of using our knowledge and the market becomes our ally. 

Set the right target

Traders need to know that they have to set realistic targets. They may be tempted to set a high target that exceeds their level of stop-loss, assuming that only a few winning trades are required to break even, no matter what the conditions are. The trader remains blissfully unaware of achieving their goals and if the target is high, the trader may never meet it. This is because the prices or value of the security may not rise that much. To put it simply, there would be some winning trades for high targets, so one could lose money. Know more

Thus when creating a new trading strategy or system, the trader needs to assess what the target profit will be and also ensure that their stop-loss levels are realistic. They should not be hard to achieve and then you determine what the break-even levels can be. While a majority of traders would be glad to break even as they begin to trade, one needs to be clear about their goal so one can earn a profit. Remember that they’re also investing a lot of time and money in this which could be used for some other low-risk option. Therefore, traders need to look at winning more trades than their break even and the main notion should be to have a perfect strategy and not to be profitable in each trade. 

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