Stop Loss order
If the market turns against your position, in order to prevent unnecessary losses, it's highly recommendable to place stop loss orders for all your open positions.
A stop loss order (or simply, a stop order) is an order to buy or sell a currency once the price of the currency reaches a specified price level, known as the stop price. When the specified price is reached, your stop order becomes a market order.
For example, you bought EUR/JPY at 135.54 and you believe that you shouldn't take losses greater than 25 pips. So you place a stop at 135.29, and you can safely get out of your trading den and breath some fresh air. Forex trading doesn't have to keep you glued to your computer screen all the time.
Most forex trading platforms offer the possibility to set limit orders with related stop orders and take profit orders. For instance, using the same EUR/JPY example, you can place a limit order to be filled at 136.20 with a related stop order for 135.90 and a take profit order of 136.80. Then you don't have to "witness" how your position will not only be opened but also closed - either at a profit of 60 pips at 136.80 or at a loss of 30 pips at 135.90.
