In forex trading, the term “breakeven” refers to a specific point at which a trade neither makes a profit nor incurs a loss. It is the level at which the total gains equal the total losses, resulting in a net neutral outcome.
Traders often use the breakeven point as a reference to manage risk and make informed decisions. The breakeven point is the level at which the market price is equal to the entry price plus any associated trading costs, such as spreads or commissions. If the market moves in favor of the trade beyond the breakeven point, the trade is profitable. On the other hand, if the market moves against the trade, the trader incurs a loss.
Breakeven can be calculated using the following formula:
Breakeven Price = Entry Price + Transaction Costs
Here, the transaction costs include any expenses associated with opening and closing the trade, such as spreads and commissions.
Traders may use break-even points to set stop-loss orders or to adjust their trading strategy. For example, once a trade moves into profit, a trader might set a stop-loss order at the breakeven point to ensure that, at worst, they will exit the trade without incurring a loss.
Traders need to be aware of transaction costs and market conditions when calculating breakeven points, as these factors can affect the accuracy of the calculation. Additionally, breakeven points may vary depending on the trading platform and broker used.
BE measures to protect capital or existing balance in your account to avoid a loss after making a profit!
To make it easier to understand it is less profitable and not facing any loss.
You can choose this BE by changing the existing SL level before to the current price (price)
You can see an example of the picture above on the top left for the stop loss and the picture on the right that has been changed to “BE”. I hope this knowledge is useful and can help you in trading.
Editorial Staff at Chweya is a team of financial experts led by Vincent Nyagaka, with over 9 years of experience in finance, commerce, forex, crypto, and marketing. Started in 2014, Chweya is now among the largest free financial resource sites in the industry and is often referred to as Wikipedia for business.
