At Eurotrader, we provide the best trading platforms to ensure a seamless and efficient trading experience.
In MetaTrader 4 (MT4) and MetaTrader 5 (MT5), several mechanisms can automatically close orders based on specific conditions. These tools help manage risk, secure profits, and automate trade execution.
1. Stop-Loss (SL) and Take-Profit (TP)
- Stop-Loss (SL): Closes your position if the market moves against you, preventing excessive losses.
- Take-Profit (TP): Closes your position when the market moves in your favor, securing profits.
Example:
- Buy order at $100, SL at $95 → Closes at $95 if the price drops.
- TP at $110 → Closes at $110, locking in profit.
2. Trailing stop
A Trailing Stop adjusts dynamically as the market moves in your favor but stays fixed if the market reverses.
Example:
- Buy order at $100, Trailing Stop at 20 pips.
- If the price reaches $105, the stop adjusts to $104.80.
- If the price drops to $104.80, the order closes automatically.
3. Margin call and stop-out level
- Margin Call: A warning from your broker that your account equity is too low to maintain open positions.
- Stop-Out Level: If equity drops below a set threshold (e.g., 50% margin level), the broker automatically closes positions to prevent further losses.
Example:
- Trading with 1:100 leverage, if your equity falls below the stop-out level, the broker starts closing positions.
Understanding these auto-close mechanisms helps traders manage risk and avoid unexpected losses.
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