Understanding break-even points allows traders to assess the feasibility of a trade or investment strategy. It helps in setting realistic profit targets and risk management thresholds. By identifying break-even points, traders can optimize position sizing and trade frequency. Break-even analysis also supports financial planning by evaluating cost structures. Additionally, it provides insights into improving profitability through better risk-reward ratios. Calculate break-even points before entering a trade. Use stop-loss orders to manage downside risk effectively.