I would like to talk about such a thing as transferring a transaction to breakeven.
Everyone knows about breakeven in Forex, but questions about transferring an order to breakeven remain.
And main question, which haunts neither beginners nor experienced traders:
Breakeven - is it good or bad?
Let's figure it out together.
There is an opinion in the trading community that after opening a position, you need to “evaporate” it to a stop or profit and not engage in all sorts of nonsense like breakeven.
In my opinion, the idea is rather controversial. Judge for yourself. On the one hand, of course, it's cool to get the intended profit, but on the other hand, it's extremely lousy when a position that gave a fat plus closes in a minus by a stack.
Imagine a situation that happens to every trader. The price after opening a position has passed 50% of the way to your intended profit, and then BAM ... It turns around and takes down your stop loss, fixing the loss. 🙁
This is where the question comes up for backfilling: was it really necessary to hatch a profit?
After the stop, you curse everything in the world and solemnly promise yourself the next time you transfer the order to breakeven as soon as possible.
When transferring a transaction to breakeven, we are driven by fear! and once again experience the bitterness of loss. The instinct of self-preservation turns on and the next time, at the first symptoms of fear, we tighten the position by +1, +5 or even +50 points. The price successfully knocks out our order and goes to the intended target, but without us…
Vicious circle, you ask?
The thing is that our reaction to the result depends on where the price went after decision. If we fixed part of the profit (or completely closed the position) without waiting for the profit, and the price then safely went to it, we say to ourselves - “Here's an asshole, we should have held the position to the end ...”. And if, after premature profit taking or triggering an order to break even, the price turns around and goes in the other direction, we dance merrily no worse than the girl in the Exhibit video, shouting: “Who is great? I'm fine fellow!" 🙂
So I repeat, to the question "Break-even on Forex - friend or foe?" there is no clear answer. That's why,
- If you do not use breakeven in your trading, you must be sure that the price in 95 cases out of 100 reaches your goals. And only statistics can show this! And then ... not always 🙁 . And don't freak out when a profitable trade turns into a losing one.
- If you use a trading tactic called breakeven, then you should not bother about lost profits when the price continued to move in your direction after closing the transaction. There will always be a second chance to re-enter the market!
Personally, I lean towards the second option and try to protect the already existing profit, while setting myself up not to shed crocodile tears 🙂 about unearned money. In any case, all actions to move the stop to breakeven or squeeze profits must be competent and conscious. They should be based on calculations, and not on emotions in the form of fear.
2 options for transferring a transaction to breakeven
As one of my comrades used to say, with all the variety of choices, we have no alternative. And there are only two options for transferring orders to breakeven:
- hard variant is when you roll over a stop loss after the price passes a certain value in points. This value can be either your stop or half of the average daily volatility of the traded instrument. As an example (and as a working option), let's say your standard stop loss is 50 pips, and the average daily volatility for the instrument is 100 pips. If the price moved towards the opening of the transaction by 50 points, you transfer the closing order to plus 2-3 points (including the spread). All! You are in the house 🙂 . A good tactic in general - the main thing is simple, but there is a nuance - this is the size of your stop. If your standard stop loss is small (10-20 points), then there is a high probability that due to market noise, your stop moved to breakeven after the price passes these 10-20 points will work too early.
- soft option, which I personally like better. The closing stop loss order is moved to plus 2-3 points (taking into account the spread) when the first impulse has passed in your direction, then a correction has passed, and after it the price has made a high/relow high or low on that . This option gives more chances that your position will not be taken out at breakeven ahead of time. But, there is a minus in this tactic - there is always a threat that the correction can develop into a complete reversal around, and you simply will not have time to pull the stop to breakeven.
2 alternative breakeven options
What other options are there trading tactics to protect profits?
- trailing stop. I talked about all its pros and cons in, so I will not repeat myself.
- Safe - this is when you close the profit on half of the position, and transfer the stop loss to the rest of the position by an amount less than the closed profit. For example, you opened a position at some significant level with an initial stop of 50 points. The price moved 30 pips in your direction, and you close ½ of your position, and for the rest you tighten the stop to -20 pips from the opening price. Thus, your stop has remained 50 points and is behind a significant level, the breakdown of which will cancel the original scenario. But even if the trailed stop is triggered, you will make a profit of +10 pips.
Let's say you opened a position with a size of 1 lot, the price of a point (on the EUR/USD pair) would be $10.
The initial risk of 50 pips is -500$.
When the safe is triggered, you get:
profit 30 p. (for half of the position), equal to $150
and a loss of 20 points (for half of the position), equal to $100.
The total profit will be + $50, instead of a loss of -500 $.
Great tactic in my opinion. Its only but significant drawback is that it greatly “cuts” profit in money terms, since only half of the initial position size reaches profit and shifts not in our favor. But there is work to be done...
Which of the four profit protection options to choose, of course, everyone decides for himself. Well, in conclusion, I want to repeat the words of great traders once again:
“You need to trade in such a way that you can take money home every day. It doesn't matter if it's one dollar or $10,000. The main thing in our difficult business is NOT TO LOSE!”
What I sincerely wish for all of us!
Here are my thoughts on the breakeven. I would be glad if you, dear readers, share your thoughts on this topic.
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Sergey Evdokimenko was with you. I will answer all your questions in the comments.
4 comments on ““Forex breakeven – friend or foe?””
Guys. Don't count points, but dollars. The price move depends on the strength of the trend. But you know that “the trend is our friend” does not happen as often as we would like. Basically there is a “sideways” or you don’t understand what. Yes, and currencies and cross-rates move differently. One will move 10 points in an hour. another 30. "The greed of the fraer destroys"! Friends. Open a deal, take yours and leave without regretting anything. Trade is an unpredictable thing. I have, for example. the turkey says that the correction has begun. I'm closing. I'll see what happens next. The trend will either move forward or it won't. I will not say here how to determine the strength of the trend, those who have some experience in the market should know this. Depending on the strength of the trend, I conclude whether it is worth sitting out further in the hope of opening a deal after the correction, or whether I need to “make it easy for my aunt”. I never use trailing stop or profit calculations. There are many indicators that speak about the strength of the movement of any currency in the market. That's what I work for. On strong currency movements. I take mine and leave. But everyone has their own preferences in trading. different styles, etc. "Seek and find." Good luck to everyone and good luck!
In my opinion, the price does not care what profit we mean and it is moving in the direction in which it will empty more trailers. Therefore, there is no need to kill yourself about a fat plus, for someone else it was a fat minus, but you just got lucky. It was also lucky that they closed it not in the red, but the fact that the price turned around, so the story would have gutted it in real life.
Gennady, the principle “I take my own and leave” is super! You can be envied (I say this without any sarcasm!), You managed to overcome fear and greed - the two worst enemies of the trader. The question is - what to do if it didn’t reach “your own”? For yourself, how are you experienced trader, this issue was resolved, because you understand and feel the market, so you don’t have such a question! And what about newbies? How to insure?
I also agree that trends do not happen as often as we would like, mostly there are flats - flats, and you should not expect multi-profits in them! Although, again, it all depends on the timeframes, the size of the corridors and the desired profit... If the daily corridor is 300-500 points and someone trades long-term and is ready to hold the position for a couple of days or even weeks, then the profit in this corridor will be quite decent.
But about the fact that it is not necessary to count points and dollars, I fundamentally disagree! You always need to understand what your risk per trade is (in points and money) and whether this value fits into your money management rules. This also applies to profit targets. If we say, the standard stop, which we set is 50 pp, and the profit that we close is +25 pp. Is this a good deal? In my opinion, not very good... Although it closed with a plus! Profit factor in this case will be 1 to 2, i.e. in order to work off a loss of -50 pp, we need two profitable trades, and taking into account the commission and negative swap (if this happened, when transferring the position to the next day), then the total is more!
In order to understand what will happen to our deposit in the future, we still need to count the numbers and keep statistics in order to understand what is the average loss / profit per trade, what percentage of positive transactions, what is the profit factor and mathematical expectation, etc. etc., and if you do not own these figures, then trading resembles the principle “where the curve will take you…” But this is already a bit of a topic for another article.
Gennady, I agree with you 100% that everyone has their own tactics and trading strategies, different styles and preferences, so everyone chooses for himself HOW he is comfortable trading!
Andrey, the price really does not care where we have a profit, where we have a stop and in which direction we have an open position!
The only thing we can influence and manage in the market is our risks. And if there is an opportunity to minimize them, then it should be done.
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We will also consider the positive and negative features of its use, examine advisers and scripts that transfer a position to breakeven. So what is it?
Breakeven is an operation that combines the opening price of a transaction and the stop loss level without taking into account the commission. Traders often say the following words: “Today I went into Used”, which means that on this day his trades went to breakeven. In this case, the trader did not earn anything. That is, at what price the currency was bought, it can be sold at this price, or vice versa, and the result is zero, this is the essence of breakeven.
Let's look at how it is used for open positions.
Let's say that on some pair we opened a buy trade and set a stop loss order to limit losses. If the rate goes in the direction of our forecast, then conditions will be created for moving an order to stop losses, which will acquire the status of a small take profit, and then we can set it to the level of the opening price of the transaction plus the spread size. Now an open buy trade has a breakeven level and a floating profit level.
The same is true for short positions. When we sell at a certain price, while the rate moves in the direction of our forecast and a floating profit area appears, we can move the order to stop losses a few pips below the price at which they were sold. So we will transfer the position to the breakeven status. If the situation develops unfavorably and the market goes up, then at least we will remain on our own.
What happens? When we set an order at the breakeven level, it is a certain kind of insurance against various unforeseen movements in the price of an asset.
This helps to reduce the psychological burden, which means that it no longer matters to us where the rate will move, since we have set the position at the breakeven level. This tactic is most commonly used professional traders and those who are afraid of losing even a small profit.
The operation of moving to breakeven has its drawbacks. Often, almost every pair that includes a dollar can be observed quite or amplitude, in other words. If you do not take this fact into account, and at the first opportunity, when the price goes a little in our favor, transfer the stop loss to breakeven, then there is a possibility of falling for the disruption of the order by a sharp price jump.
That is why this tactic is suitable for cases when there is a good trend in the market, which drags the price with it. In this state of affairs, volatility will not be able to reach the level at which the stop loss is located.
I would like to note that low volatility in the presence of a flat or otherwise will not save us from failure when using this tactic. This is because the market in this case is almost at the same level all the time, which will inevitably lead to a breakdown of the stop loss, which is located at breakeven.
We recommend that you take into account the distance from this level to current position prices. It should be enough to maneuver. Otherwise, trades can often get hit by breakeven stop losses, and you will miss out on your potential profit on orders.
Let's move on to automatic methods of transferring concluded deals to breakeven using Expert Advisors and scripts.
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One of the Expert Advisors that will help you automatically move positions to breakeven. To automatically transfer trades to the breakeven level, there is an Expert Advisor, which, in fact, is a convenient utility.
It's called ShowMeBe. This robot will not only help you move one of the orders to the breakeven area, but also order grids opened manually or with the help of another adviser. Such a robot may be suitable for or.
And now about how to install the utility in trading terminal and on the price chart.
Installing ShowMeBe is a simple procedure that we perform when we turn on any Expert Advisor in the terminal. After the installation process is completed, you need to run the . For the adviser to work correctly, you need to check the terminal settings and make sure that they allow you to use the robot in trading.
Expert Advisor for transferring to breakeven, working in invisible mode
The invisible breakeven EA is called STEALS, you can download it by clicking on the button just above.
Have you ever thought about the offer of any developer of MetaTrader 4 advisors to purchase a product, which works in a mode invisible to the broker? You say that this can not be? And here you are wrong!
If the levels are not set as a stop loss, then, according to general rules, the broker will not see exactly where the orders were placed. Labels play the role of levels.
Several years have passed since the appearance of this Expert Advisor. This robot has done a great job. Its functionality consists of:
- Placement of virtual take profit,
- Placing a virtual stop loss,
- Setting stop loss to breakeven.
When orders are found on the chart, the EA puts labels on the closing prices for take profit, stop loss and breakeven. In this case, the adviser can work on various magic numbers.
When setting the magic number to -1, the EA will service all orders on the chart. If you set this parameter to 0, then the EA will only work with manual orders.
Advisor options:
- TakeProfit = 0. If zero, it is not used.
- StopLoss = 0. If zero, it is not used.
- Bezubitok = 300. Breakeven level. Zero is not used.
- BezMinDis = 50. Minimum profit taking when we move to breakeven.
- Magic = -1. At -1, it works on all magics.
- Slip = 20. Slippage.
- comment = 2. Number of message lines. It is recommended to set to 0.
Breakeven script
Script to break even your open orders. The principle of the script for transferring orders to breakeven is very simple. After activation, the code proceeds to a sequential inspection of all open orders and, if possible, transfers their stop loss to the breakeven level, for five points of profit.
If you need the script to move the stop loss to the level of the open price, then you should slightly change its code. To do this, for example, hover the mouse over the script and right-click on it to bring up the context menu. Here we select "change". After that, the script will be opened in the meta editor.
We find the parameter that determines the breakeven level and define it at our discretion. Next, click "compile". Now everything is ready.
How to apply this script:
- Select the desired software module with the mouse. By pressing the left mouse button, we “transfer” it to the asset chart.
- When a new tick arrives, the script starts running. He will ask you "to breakeven all orders for 5 points?".
- You need to confirm the parameter change.
- The script itself will change the stop loss parameter of all orders that have been opened.
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ShowMeBe is the best Expert Advisor for transferring to breakeven, which has the following settings:
Magic - here you can specify a unique adviser code, all transactions of which will be transferred to breakeven. By default, the Magic parameter is set to 0, which indicates that ShowMeBe works with all deals;
Direction - this parameter sets the direction of the adviser. If set to 0, then the trading expert works only with purchases. If set to 1, ShowMeBe will only work with sales. For the EA to work with all positions, you need to open two chart windows one at a time. On one window, you need to configure the adviser to work with sales, and on the other - with purchases;
ChangeTP - when the mode is set to true, it enables the function of setting a take profit;
CustomTP - here you can set the take profit value. If it is 0, then in the next parameter TP_BE_plus_PIPs, you must specify the number of points that will automatically be added to the breakeven;
ChangeSL - when set to true, we allow the EA to modify the stop loss. The default is false;
CustomSL - here you can set the desired stop loss;
SL_BE_plus_PIPs - in this parameter you can specify the number of points that will be added to the breakeven level;
SL_BE_Distance - here you specify the distance that the price must overcome before the moment when the stop loss is pulled up to the breakeven level;
AllowModify - this parameter allows the EA to modify orders (default is false).
After installing the adviser in and launching it, in the left corner of the chart, you can see all the necessary information: breakeven level, taking into account , traded currency pair, as well as take profit and stop loss levels, if they are set in the settings. Thus, the transfer to breakeven helps to reduce the likelihood of losing trades, and subject to the rules described above, you can not only avoid the loss of the deposit, but also significantly increase it.
Download advisor for free:
Hello fellow traders!
Very often, at the initial stage of trading, novice traders meet in the descriptions such a concept as breakeven on Forex, but not everyone fully understands what it is and how this operation is implemented in the trading process. In this article, we will talk about this operation in detail, and consider the following points:
- What is breakeven in Forex? What is its essence in the trading process?
- How to carry out such an operation for an open transaction on Forex? Let's take a look at practical examples.
- What are the advantages and disadvantages of using breakeven in Forex?
- Automatic adviser for transferring positions to breakeven.
So, breakeven on Forex is such an operation when the price of opening a transaction and the price where it is for this position are the same, excluding commissions. Very often, traders say in their jargon “today I went into used”, that is, to break even. This means that this trader has practically earned nothing - at what price he bought the currency, he sold it at that price, and vice versa ( in simple words, the result of the transaction is zero).
A practical example of the implementation of breakeven in Forex for an open position
In the figure below we see the course. Let's say we bought the euro at a price of 1.24650 and placed a stop loss order at 1.24585. With a good set of circumstances, for us, the rate rose to the level of 1.24750. AT this moment, we can move the stop loss (which automatically turns into a micro take profit status) to the level of 1.24660 (order to open a trade plus ). Now for the open order to buy Buy, we have a breakeven level and a floating profit level.
If the market goes down sharply, then it will touch our stop loss order and we will remain at breakeven, so let's say, for how much we bought, for the same amount we sold, taking into account the spread (we didn’t earn anything and didn’t lose anything).
The same applies to short positions(for Sell), the so-called shorts. If we sold at one price, and it goes in our direction (floating profit area), we accordingly smoothly move the stop loss order a few points below the price at which we sold. Thus, we gradually transfer the position to a breakeven state. Under unfavorable circumstances, if the market goes up, we will remain at least with our money, losing almost nothing, but not earning either.
The main advantage of taking a position to breakeven in Forex is that a trader who uses the tactic of smoothly transferring a position to breakeven, moving the stop loss following the price so that the market does not touch it with a random volatile movement, and at the same time, securing his position from losses .
Thus, when setting a breakeven for a transaction, we get some kind of “insurance” against any “force majeure” of the currency price, and reduce our psychological burden. In fact, we already, if I may say so, “do not care” where the market will go, provided that it does not go in our direction with floating profit, we still do not lose anything. And this tactic, for the most part, is used not only by professional traders with experience, but also by those “currency traders” who are very afraid of losing even a small amount of profit.
How to apply breakeven in Forex is perfectly described in the manual trailing stop tactics, you can read about it in detail in the article.
The downside of the transition to breakeven operation is that very often in the Forex market almost every popular pair with the dollar, be it the euro, the British pound sterling, Swiss frank or the yen, there is a strong enough (“range” of the price). And if you do not take this fact into account and immediately at the first opportunity, when the price has slightly gone in our favor, transfer the stop loss to breakeven, there is a great chance to "run into" its "tearing" by a sharp price jump.
Therefore, this tactic is suitable in cases where we have a good, the market is confidently going in our direction, and even its volatility does not reach the level at which we placed our stop loss. Also, I would like to note that with low volatility, when the market is in the channel () without a trend, this tactic is not effective, since the market is almost at the same level and makes small movements that at any moment can lead to a “breakdown” of your stop loss, which is in breakeven.
Recommendation! When setting breakeven on Forex for open position, take into account the distance of this level from the current price level on the chart. Price needs to be given enough room to maneuver. Otherwise, trades will often get hit by stop losses at breakeven, and you will miss out on your potential profit on such trades.
Now we will consider automatic ways of transferring open trades to breakeven on Forex with the help of an Expert Advisor.
Expert Advisor for automatic transfer of positions to breakeven on Forex
To automatically transfer transactions to the breakeven level, a special adviser was created, which was called ShowMeBe.
This simple Expert Advisor allows not only to break even orders, but also grids of orders opened manually or by another Expert Advisor. Suitable for and .
You can download the ShowMeBe breakeven advisor by link
So, let's look at how to properly install this utility in the trading terminal, and then on the price chart.
Installing ShowMeBe is no different from the standard installation of any other Expert Advisor, so you can read how to do it correctly in a special article.
After we have completed the installation process, run the . For the correct operation of the adviser, just in case, check the appropriate settings in the terminal.
After transferring to the chart, the ShowMeBe Expert Advisor's input parameters window should pop up.
A detailed description of all its parameters is present in the archive along with the main working file of the EA (you can download it from the link above).
How does ShowMeBe work in practice?
When all the necessary Expert Advisor settings are made, you can open the required positions (for example, let's open an arbitrary Buy position):
The EA automatically calculates the breakeven level for the transaction, and in the upper left corner of the terminal shows all the necessary information, i.e.: currency pair, breakeven level including all commissions, stop loss levels and displays how many points the price must pass in order for the EA to set stop loss.
Well, fellow novice traders, now you know what breakeven is in Forex and how to use it. So use the information received correctly and thereby improve your trading.
So, friends, in the next article I am starting to publish a new manual on managing other people's funds of investors through Pamm accounts, where we will analyze everything step by step important aspects this area of activity foreign exchange market Forex. Do not miss to find out detailed and important information about this, and for this subscribe to updates.
Sincerely, Alexander Siver
Every trader sooner or later faces a situation where the price travels a significant distance in the direction of the take profit. Then it reverses, eats up all the floating profit and knocks out the stop-loss position. Unfortunately, under these circumstances, it is useless to optimize the system signals. For this reason, it is necessary to minimize losses by moving the protective order to breakeven.
To better understand the meaning of this operation, consider a simple and relevant example. Suppose a trader trades on the daily timeframe of the USD/RUB pair from overbought/oversold levels, according to the following signals:
- Stochastic touched the 80 mark, after which the fast line crossed the slow one from top to bottom - we buy the ruble;
- Stochastic touched the level 20, and then its fast line crossed the slow one from the bottom up - buy a dollar;
- Profit is fixed at the moment the indicator touches level 50;
- Stop loss is placed behind the latest extreme.
Thus, if you do not use breakeven method, a potentially profitable USD/RUB short would be closed by a stop loss. This is at best, because novice traders often forget to set protective orders altogether.
A completely different picture is obtained when using breakeven. The speculator insures his deposit, both against force majeure market circumstances and against possible problems on the dealer's side (for example, if the terminal loses connection).
Types of breakeven on Forex
As a rule, traders use one of three options for maintaining positions. The first method involves moving the stop-loss for the entire position to the level of the opening of the transaction, adjusted for the spread.
I call this type of breakeven "classic", since it is his description that is most often found in the literature.
The main advantage of this approach is the ease of position management. As for the disadvantages, here you have to put up with a large number of false positives of a protective order. Formally, of course, they are executed correctly, I just call situations when, after closing a deal to zero, the price immediately reverses and starts moving in the direction of the signal with renewed vigor.
The second type of BU is widely used not only in Forex, but also in all other sites. To characterize it, I use the term "hidden", as it involves trading according to the following scheme:
- As in the first case, the trader waits for the price to move some distance towards the signal;
- As soon as the first target is completed, half of the order is closed with a profit, and the second part is left in the market unchanged.
Of course, hidden breakeven will only be beneficial if the first target is greater than or equal to the stop loss in absolute value.
And the last method of maintaining positions is the most profitable and difficult - it is called. To date, there are dozens of subspecies of this strategy. All of them work according to the following principle - as the price moves, the trader gradually tightens the stop loss behind the price, i.e. uses not fixed breakeven values, but floating ones.
Depending on the level of theoretical training and practical experience, a speculator can use the following “trailing” options:
- The standard one from the MetaTrader4 terminal is the easiest way, which often fails;
- Level, the essence of which is to set breakeven below / above strong support / resistance;
- Fractal - in this case, the stop loss moves along the fractals of Bill Williams.
You can list the options for a long time, but the essence of the trailing stop, I think, is clear - first we transfer the order to breakeven, after which we begin to gradually tighten it following the price.
So, breakeven in Forex is a special method of position management, with the help of which you can secure a deposit from various unforeseen circumstances. This method is actively used in Forex along with . Like any other "insurance", this approach forces the trader to give up part of the potential profit associated with risk.
