Should I close my profit or my loss first?

 

Hello.

I don't know if it makes much of a difference, but I've always wondered... say I have a position in profit, i.e. $20, and there's another trade in loss, i.e. $-15. In all I'm gonna make $5 profit, but does it make a difference if I choose to close the profit first, so that my balance increases and then goes down when closing the loss, or is it better the other way around? I'm asking because I'm thinking that doing one way you migh run into negative free margin, but maybe I'm wrong since the balance goes up first.

Any thoughts? Thanks.

 
Carlos Moreno Gonzalez: one way you migh run into negative free margin,

You should have verified that you have enough margin before opening a second order.

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk (on leveraged symbols). Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce, the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP, but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check Free Margin to avoid stop out

  6. For MT5, see 'Money Fixed Risk' - MQL5 Code Base (2017)

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

 
Carlos Moreno Gonzalez: I don't know if it makes much of a difference, but I've always wondered... say I have a position in profit, i.e. $20, and there's another trade in loss, i.e. $-15. In all I'm gonna make $5 profit, but does it make a difference if I choose to close the profit first, so that my balance increases and then goes down when closing the loss, or is it better the other way around? I'm asking because I'm thinking that doing one way you migh run into negative free margin, but maybe I'm wrong since the balance goes up first. Any thoughts?

Either way your margin has already been "deducted" from your free margin when you placed the orders, and either way your margin will be "released" when you close a trade be it a losing one or a winning one.

I guess it will just be a question of personal preference if you want to see your Balance graph with dips, or with rises.

Reason: