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How to Exit Using a Single Sided Stop and/or Limit Order
In this video, I want to give you an example of exiting a position with a single sided stop and a single sided limit order. The first thing we do is we want to assume we're in the market, let's get in the market with a buy market order. We're going to be long the market. Let's say that we want to take our profits once the market hits a specific price. The way we would do that is we would use the limit order. We would come in here and we would place the limit order above the market. You can see it's red, indicating that we would be selling. The reason we're selling is, we're already long the market; we're already green.
Let's say that we want to get out of the market once the market reaches this price level. We would put a limit order to SELL 1 AUD/USD limit order, to go short the market. Which actually wouldn't be shorting right, it would be exiting the long position. So we have quantity 1 that we're long, if the market reaches this price, this limit order will take us out of the market at this price level, and pocket our profits. On the other side let's assume that the market turns around and begins to drop, and we are long the market.
We can use a stop order, and we can come in here and say stop order. A single sided stop order could be placed below the market, this would be a stop loss order. For example- We can place this order underneath the market. We go ahead and hit okay. Now, what this is doing is it's protecting our downside risk. If the market turns around, goes against us and comes against us and touches this level, it will actually exit our position from us, and reduce our stops, or what we call a stop loss. It will stop our losses if the market continues lower. This is a stop and a limit bracketing the market that we are long this position, as a limit to take profits and a stop to protect losses.