Stop-loss orders are an important risk management tool used in Forex trading to limit potential losses. A stop-loss order is an instruction to automatically close out a trading position when the price of a currency pair reaches a predetermined level. The stop-loss order is placed at a level below the current market price for a long position, and above the current market price for a short position. The purpose of the stop-loss order is to minimize losses in the event that the market moves against the position held by the trader. By using a stop-loss order, traders can limit their potential losses while still allowing for the possibility of gains if the market moves in their favor.
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