Hello guys I downloaded MT4 two days ago and managed to open a demo account with $5000.
I slowly get to know the software but there are still things I just don’t understand.
When going long (buy) I understand that a S/L is below my buy (and current EURUSD) and a T/P is above my buy, so when EURUSD drops below my S/L I’m out with not-so-much losses and when its above my T/P I’m out and get a small provit.
Now I started to try the same with going short (sell) but this time put the S/L ABOVE my buy and the T/P below my buy and the curent EURUSD because it’s like buy but the other way around (in my mind).
My problem: I seem to get stopped out randomly from time to time which does not happen when going long. Does S/L and T/P work differently when going short?
Thanks in advance for any help
Edit: I just started newbie school and it is awesome, thanks alot to the people who made it (it’s fun, too)
Your understanding of S/L and T/P is sound. The cause of your problem are the Bid and Ask prices.
Bid is the highest price that a buyer is willing to pay for a security ( “Sell by Market” in MT4/ Short in your perspective), while Ask is the lowest price that a seller is willing to sell a security for ( “Buy by Market” in MT4/ Long in your perspective). Ask is almost always higher than Bid price.
When you go long you enter a trade using the Ask price. If you wanted to close your long position you would have to close/sell it at the current Bid price.The chart displayed on MT4 is a Bid chart that’s why you don’t think you’re being stopped out randomly.
When you go short in MT4 you can only see the Bid price at which you entered a trade on the charts but not the exit price. Your stop loss will trigger based on the Ask price of the currency pair. It is also not uncommon for the Bid-ask spread to widen up to 10+ pips during news releases. You can see the ask price of the currency pair by pressing F8, selecting the “Common tab” and enabling “Show Ask Line” or just opening the MT4 order window.
