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Thread: Discover how to place your stop loss and take profit correctly

  1. #1
    Trader Toyen's Avatar
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    Discover how to place your stop loss and take profit correctly

    Introduction:
    One of the main challenges i face when i started trading forex market is the inability to place my stop loss and take profits correctly. All i knew was to trade forex with the best strategy, that is why many traders are still learning everyday because they want the best strategy, but they will not get it. Traders can only make the best from the little things they know by planning it well, and when we have the correct method of doing things, our trading experience will be an enjoyable one for us.

    As many traders might have known this stop loss and take profits strategy, they can therefore call it an exit point strategy, since they are the point at which trader closes their trading position, this is very important for us in planning our money and risk management also, that is why it is very important to every one of us.

    How to place a correct stop loss:
    There are two ways i know in doing this, we can use the support and resistance level to do it, and we can use the important height and low on the candlesticks chart.

    Candlesticks type:
    Take for example the picture of USDJPY below, when we consider to sell the market, our stop loss will be at the red lines which i drew on the chart, the one the trader will use depends on the term and duration of trading of the trader. It is like that because that point are the sharp peak points on the chart by that time.





    Support and resistance type:
    The support and resistance is simple, take trendline strategy on USDJPY as example on 4H chart. When you plot the trendline already, your stop loss will be at some few pips above trendline level in case the market breaks off the line against you. This example is for trendline resistance and you shall do the same with the opposite too.





    How to place a profit target correctly:
    This can also happen in two ways, we can use the candlesticks sharp peak point and bottom to do it, just like it is seen in this picture.





    We can also use the support and resistance levels of any breakout strategy to place it. Let us take pivot point for example, when we trade buy market, and R1 of pivot is broken, we can target R2 or R3 as our take profits.

    I hope this will help many traders. You can ask me any question you don't understand on this.

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  2. #11
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    you think right that every strategy has own rules for placing stop loss.we have need to follow the direction of the market and put stop loss carefully for account safety. candlesticks are more accurate than others candles we have to need to follow them for success and earn money in forex market.
    Quote Originally Posted by Darkhorse View Post
    I think each and every trading strategy comes with the ways and means the trader can make use of the stoploss when trading. That is what I have learned, but the one I use in my trading strategy is the candlestick type, with that been said, I get to be able to control my risk and then take on good trades At the end of the day, we need to master the our strategy first before rightly use of stoploss.

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  3. #12
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    letsdo, yes every strategy have different rules but i think stop loss and take profit mostly depend on our capital and on our risk management part, it can be how much we can earn and how much we can lose in one order, we can close order before also if we have achieved our goal so its on us how we treat

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  4. #13
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    Quote Originally Posted by naeem555 View Post
    letsdo, yes every strategy have different rules but i think stop loss and take profit mostly depend on our capital and on our risk management part, it can be how much we can earn and how much we can lose in one order, we can close order before also if we have achieved our goal so its on us how we treat
    You are right, it depends on the percentage of our trading account and as I have been able to learn so far so good. The use of the risk management shouldn't be more than 2 percent if we are new to the market. That is basically how we can get to trade in such a profitable manner and become profitable. Use of stoploss is good and saves us from losses.

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  5. #14
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    after some trading experiences. i see to determine the stop loss and take profit is support resistance besides the trend also the candlestick patterns and choose the right time frames . so we see that high time frames is very much recommended

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  6. #15
    Trader Senorita's Avatar
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    You would realize that stop loss is very helpful and what is needed to ensure that we could very much have what it takes to make sure our capital is well managed. As traders we should know the value of risk we are risking on each trade and try to set it all up with stop loss while targeting the number of pips we projected to achieve. The risk to reward ratio will be helpful and this is what will help us maintain the perfect means of trading that will constitute to success.

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  7. #16
    Trader Obaforex's Avatar
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    Placing stop loss and take profits in the forex market is not really a fixed idea, because the appropriate way to do this usually varies for various trading strategies in the forex market, so you need a sound knowledge of your trading strategy and how market moves to be able to set appropriate stop loss and take profits, however placing them around support and resistance seem very common and works well for most strategies.

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  8. #17
    Trader layigold's Avatar
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    There are so many different ways of placing stop loss in forex trading and this has to do with the strategy being used . There are some traders that make use of fixed number of pips to determine the stop loss positioning and there are some traders that make use of the candlestick patterns to get that done . If you look at the GBPUSD chart on weekly basis, you will see a clear pin bar conspicuously formed and I am planning to go long on the pair and the stop loss target would be better placed few pips below the tail of the pin bar as you can see in the chart below .

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  9. #18
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    Having stop loss and take profits is necessary aspects that all traders should consider in their trade but the most important thing is that, is not all traders that knows how to place their stop loss and take profits correctly for them to trigger at all times, the most reason why a lot of take profits do not trigger or a lot of stop loss hit, is that fact that proper analysis was not make and a lot of traders have unreasonable target at a time.

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  10. #19
    Trader famousfx's Avatar
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    What a nice job you have done taking pain to go this length to give good explanation of all , thank so much for doing this, the thread is going to help a lot of people to get good idea of trading profitably, resistance and support trading strategy is so much profitable to traders.we need to have good knowledge of it so as to place our stop loss and take profit correctly.

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  11. #20
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    place stop loss takes profit is a good idea to control the emotion and safe our account.so we have always need to put the stop loss with our strategy base it will give us more clear direction then our own sentiment.this is the really helpful picture to understand the logic of putting stop loss and I have also used this method.
    Quote Originally Posted by layigold View Post
    There are so many different ways of placing stop loss in forex trading and this has to do with the strategy being used . There are some traders that make use of fixed number of pips to determine the stop loss positioning and there are some traders that make use of the candlestick patterns to get that done . If you look at the GBPUSD chart on weekly basis, you will see a clear pin bar conspicuously formed and I am planning to go long on the pair and the stop loss target would be better placed few pips below the tail of the pin bar as you can see in the chart below .

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