One of the key skills of any trader is the setup of stop loss and take profit orders-both of which often come in handy in the volatile world of commodities trading. Stop and take profit orders would automatically close trades if the market hit a predefined price, thus limiting losses if the market goes against you or protecting profits if you want to lock them in. MetaTrader 4 has made this easy and flexible, giving you complete control over your trades.
In commodities markets, such as oil, gold, and agriculture products, stop-loss and take-profit orders are necessary because prices can move unexpectedly. The stop loss refers to setting a cap on the losses; it closes your position if the market does not work in your favor, while the take profit order locks in the gains when a market reaches a certain target.
To set up these orders in MetaTrader 4, you open a trade first. Once the market order or pending order is placed, go to the “Terminal” window and right-click on that trade and open Modify. From there you have the possibility to fill in both stop loss and take profit. The point of setting up these orders would be at a reasonable distance from the current price according to the commodity’s volatility and one’s risk appetite.
For example, if you are trading oil, where price fluctuations can be wide, placing a stop loss too close may see the account being stopped out frequently, while placing it too far may expose it to loss scalp rates much larger in value. Correspondingly, take profit order should lock in the gains before the market is about to reverse. Proper balance should be struck as the commodity’s volatile nature would dictate that.
Using the pending orders, you can also set stop loss and take profit levels. These pending orders mean that you are setting a buy or sell order at a future price. This will automate entry and exit when the market reaches your target.
You can also dynamically change your stop loss and take profit orders according to the change that is taking place in the market. This is because if the price of a commodity starts moving in your favor, you could decide to tighten the stop loss so as to lock your profit while at the same time giving the trade some space to breathe. However, if market volatility is growing, and the trader is planning for a more significant price movement, then he may want to increase his take-profit level in anticipation of greater swings. The real-time flexibility in the changes allows this flexibility, which helps traders react faster as demanded by the changes in the dynamics of the market, without the time-consuming task of continuous monitoring.
With this kind of approach, it becomes very manageable to be disciplined in trading. This type of control is of high value in fast-moving markets as well, such as commodity markets, especially in markets where prices have quick variations, to preserve your capital and keep your strategy properly set during trading.
