Breakeven stop

A breakeven stop is a risk management technique where a trader adjusts their stop-loss order to the trade's entry price after the market moves favorably. This ensures that if the market reverses, the trade will close at the entry point, resulting in neither a profit nor a loss, excluding commission and spread. For example, if a buy order for EUR/USD is opened at 1.1000, and the price moves to 1.1020, the stop-loss might be moved from 1.0980 to 1.1000.

For a retail trader, implementing a breakeven stop reduces the risk of a losing trade to zero, beyond initial transaction costs like spread (e.g., 1 pip on EUR/USD is 0.0001). While it protects capital, it can also lead to trades being closed prematurely if the price retraces slightly before continuing in the original direction. This strategy addresses the habit of holding trades that turn against the trader after showing initial profit.