Breakeven
Tue, Apr 15Breakeven is the point at which your trade results in neither a profit nor a loss. It is also referred to as the price at which you entered a trading position.
In terms of price action, breakeven represents the level at which the risk associated with the trade is recouped. For instance, if you purchase GBP/USD at 1.4050 and subsequently close the position at the same price of 1.4050, you achieve a breakeven outcome, resulting in zero profit and zero loss.
Some traders prefer to adjust their initial stop loss to the original entry price once the current price has moved favorably. Here’s a practical example:
You buy GBP/USD at 1.4050. You set an initial stop loss at 1.4010. The price then increases to 1.4090. You adjust the stop loss to 1.4050 (the breakeven level). If the price subsequently drops back to 1.4050, your trade will neither yield a profit nor a loss, resulting in a breakeven trade.
How to Calculate Breakeven Percentage
To determine the breakeven percentage, you can use the following formula:
Breakeven % = (Stop Loss / (Profit Target + Stop Loss)) x 100
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