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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. #1611
    Trader Doge's Avatar
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    I think it's better to not have fixed limits, at least not until the trade is well underway. We should definitely have some target zone, but if the trade goes well in many cases it is better to further up our aims.
    For stops including trailing looking back one or two strong bars plus one or two spreads should be good enough for most trend entries.

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    Wow. Much Forex. So Monies. Very Opportunity.Many Trade. So Amazed. Wow.

  3. #1612
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    Quote Originally Posted by Goldenstein View Post
    closing our trades manually during our live observation is also good thing to do because it is a faster method than stop loss. we may do this with our trading after we realize that market is no longer supporting our analysis and it is going to hit our stop loss anytime soon. to reduce our loss and start participating real movement, we can take this quick action and make new analysis to trade with better movements to follow market.
    I agree with you. I close my orders manually too if I see that market turns against me and something should happen or something is wrong and I can not understand it. Manual closing is very good option and it means that trader has experience if he is able to do it. But reals stop loss should be placed anyway as there can be big spikes.

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