What Is A Break Even In Forex?

Understanding of what Break Even Forex can help minimize losses. Sometimes break even is better, rather than crashing a more fatal loss risk.

Every trader wants to make a profit in forex trading. The benchmark used is usually the amount of Profit and Loss obtained by the trader itself. However, did you know that there is one more missing? That is Break Even !!!

There are still many traders who are not aware of Forex Break Even. Even though, Break Even is an important component that needs to be included in your trading journal. Curious about what is Forex Break Even? Check out the full explanation below.

What Is Forex Break Even?
Quoted from BabyPips, Break Even is a point where the profit is equal to the loss. In other words, a trader who experiences Break Even is not profitable and also does not lose.

When experiencing Break Even, you should not be discouraged and take it lightly. Break Even is indeed unable to increase profits on a trading account, but in reality, the break even condition is very important to protect your capital.

Of course no one wants to break even. All of them definitely want profit in trading. But in your opinion, will the path to consistent profits be that easy? Sorry, the answer is of course not. To be able to get consistent profits, face Loss and Break Even.

Break Even Example:

There are two examples of conditions that illustrate what is Break Even forex, namely Break Even conditions that should win and Break Even conditions that should be lost. Still confused? See the explanation below.

1. Break Even Forex Examples That Should Be Profit

Of course no one knows where the price of a pair will move. This is what triggers emotional struggles within you. When trading based on emotions, or not sure the price will move according to predictions, sometimes you will unconsciously do Break Even. The pattern is as follows:

You are assumed to open a Buy position with Stop Loss 200 Points and Take Profit 400 Points. Initially, prices move up as you expect.
But soon after, the price suddenly dropped drastically. Because of panic, you also do Exit manually in the Break Even position, without waiting for the price to touch Stop Loss at the level of 200 points.
After Exit, the price turns back up according to the initial prediction. The movement is quite tight so that you touch Take Profit 400 Points which you originally set.

The scenario above can happen when Price Action displays a swing (swing) price that moves quite wildly. Initially positive position, suddenly reverses direction and has the potential to be negative. This can happen due to many factors, one of which is that you forget to check the Forex Calendar, and trade before the release of economic data. So is your decision above right? Yes, because you came out in a Break Even condition. You are not profitable, but also do not lose. Leave it alone even though the price turns to touch Take Profit. Can't you look for luck again somewhere else?

2. Forex Break Even Examples That Should Be Loss

Sometimes there are times when you are grateful to do Break Even. Why? Because if you don't do Break Even, the loss you experience will be even greater. Consider the following illustration:

Just as before, you are assumed to open a Buy position and Stop Loss 200 Points and Take Profit 400 Points. The price turns down and your account has floating loss.
Shortly thereafter, prices turned back up. You also do Exit manually in the Break Even position, without waiting for the price to move to the Take Profit level at the level of 400 points.
After Exit, it turns out the price slides back down and the movement is quite fast until it touches the Stop Loss 200 Points that you previously set.

What lessons can be taken from the scenario above? If you don't decide to Break Even, then your position will certainly suffer losses. From here, Break Even turns out to be a savior when the market is not friendly.