Market order management allows you to make a guaranteed profit
The Sell Stop market order is one of the options for pending orders on the Forex exchange, which are used by traders simultaneously with instant orders.
An order of this kind is placed to sell the base currency (in a pair) and makes it possible to open a deal when the price of the instrument is below the set mark (value).
As a rule, this order is successfully applied in case of a downtrend in the forex market, but other options for its implementation exist.
By placing a stop to sell, the player expects that the price will not stop moving and falling, and therefore. the trading operation will be profitable.
Let's consider the principle of working with this stop order.
The scheme for working with Sell Stop is as follows:
To place this order, you must select among other pending orders in the trader's trading terminal menu, and also specify the default settings.
You can also limit the duration of its functionality: a trader should not forget about this option.
It helps the player excellently: it gives the opportunity to «get out» when the order is triggered from a sharp jump - a decrease in prices, and then, with a high level of probability, the transaction may turn into a collapse and financial losses.
If the trader sets the activation point of the order in advance when it will be triggered, he will be active upon reaching the trend of this level (value), and the price may change its course.
One of the key parameters in the order setting procedure is such order as Stop Loss.
Many players simply neglect it (especially beginners), remembering it as their capital decreases. To prevent such failures from happening, you must always remember the following.
In this situation, Take Profit should be less, lower than the selling price, and then Sell Stop will be triggered when the position for selling reaches the profitable level.
In contrast to the first indicator, the stop order needs to reach a value higher than the selling price.
Therefore, such an important and necessary condition is that the Stop Loss will be able to save the trader from large financial losses if, after the transaction, the tendency turns back to the upward trend.
As for trading tactics, there is a strategy based on the Sell stop order.
Sell Stop is an order for which there are several ways to set:
1) breaking the price corridor: you can break through the channel by setting support and resistance lines.
Further, it is necessary to place the order we need at a distance of 15 points from the first line.
2) until the moment when important news appears on the market: you need to place an order below the value of the current price (10 points lower).
If the event is negative for the base currency of the pair, the order is activated;
3) set up special levels - of particular importance. For them, the price lows will come off completely.