Orders & Risk
Breakeven
Moving your stop loss to the entry price so the trade can no longer lose. Usually done once price has travelled one unit of risk (1R) in your favour.
Also called: break even, break-even
In practice
You buy EUR/USD at 1.1050 with a 20-pip stop at 1.1030. Price climbs 20 pips to 1.1070 — one full risk, or 1R. You move the stop up to 1.1050, your entry. Whether price now rockets to 1.1100 or falls back, the trade cannot lose money.
Why it matters for traders
Moving to breakeven converts a risk into a free option on the trade continuing in your favour, which is psychologically powerful and capital-protective. The trade-off is that you may get stopped out on noise before a larger move develops, so the rule works best when applied to specific setups rather than every trade by reflex.
Common pitfall
The common mistake is moving every trade to break-even the moment it shows any profit, which gets you stopped out on noise before the real move develops. Breakeven is a tool for specific situations — after a clear 1R advance or near a key level — not a reflex. Applied too eagerly it converts good trades into scratches and never lets the edge play out; applied selectively it protects capital without strangling the winners.
Lessons that use this term
- Managing a trade in profit
Breakeven stops, when to move them, and trailing stops — locking in gains without strangling the trade.
Related terms
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