FOREX Strategy: How to set your take-profit

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Have you ever noticed how often you bargain for things you want to buy while travelling abroad, even if the price is already far less than what you would expect to pay in your own country?

Well, in trading you should be thinking similarly — just because you regularly make money from your established take-profit definicion forex stop loss and take profit indicator, are you extracting the maximum amount from every trade?

Is my stop-loss too close to my entry point? How is my take-profit in regards to my stop-loss? Before opening a position, you should always have a clear view of your money management parameters — meaning stop-loss and take-profit levels. Risk management, or money management, is a core concept when learning about trading to preserve your capital. A good starting point is to definicion forex stop loss and take profit indicator for one of at least 1: In relation to your trading profile, you should determine your money management parameters and that must be part of your trading plan.

You may sometimes be tempted to take positions without following your trading plan, but resist the urge! As we said in a previous articleyou should always follow your trading plan and apply sound money management.

To help you think more thoroughly about your trading plan, read: Choosing a profit level is a key aspect of your trading strategy, so you need to have thought about it beforehand. There are number of ways that you can determine your profit target, from technical and mathematical indicators to chart patterns. Using support and resistance levels is one of the easier and more powerful tools. Support and resistance levels are excellent tools you should always take into account in your trading to visualize key levels on a chart where the price may start rising or falling.

Investopedia defines a support as the following: A resistance level has the opposite definition of a support level. Those are my main occupations. I've been into Forex Trading since and, as they say, I've seen the good, the bad, and the ugly. Definicion forex stop loss and take profit indicator survived the GFC and learned a lot along the way.

Today I want to share all my knowledge and insights with you. Home Our Blog Course: How to set your take-profit Kirill Eremenko October 20, No comments. How to set your take-profit Importance of money management rules and trading plan Before opening a position, you should always have a clear view of your money management parameters — meaning stop-loss and take-profit levels. What are you waiting for? Learn the Top-5 Forex Trading Techniques.

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Profit target is the price set on the chart where we plan to exit from the trade. If we set the PT to and the market gets to the price, the trade automatically ends with a predefined profit. Stop loss represents the maximum loss we want to accept with a certain trade.

If we set a point SL and the market will go against us and moves even further against us for another points, we will receive a predefined loss of only 50 points because we have set our SL. SL may be influenced by the slippage we have already written about , but this is usually not critical and in most cases it is just few points.

We sell at 1. If the price reaches the level of our PT, we take the profit. Downtrends are having constantly lower and lower high, so we suppose that the price should still decline, so shifting the stop loss over to the last high is an often-used step. To make it clear. When setting the SL, we must take into account natural market movements and its dynamics.

The size of the stop loss is different for each individual market. Some markets can work with smaller stop loss and some need bigger ones. If the market has an average daily range from high to low of over pips for example, British Sterling , we must expect a higher stop loss here.

Usually, however, the larger stop loss means bigger potential gain. In general, one rule applies to the stop loss. Stop loss is what protects you from massive loss and erasing of your account.

S o never trade without stop loss, always have it in place! We can only skip the stop loss it if we trade the long-term trends over months and years and we do not use leverage, but that involves minimum traders. We are getting to the more pleasant part. Like stop loss, the profit target varies by market, strategy, and also by a trader. It does not apply that PT should be larger than SL. We should also try to place a profit target in the logical zone, for example, if the market is in uptrend and in correction, we should place PT at the last high level.

Or, we can place PT at a higher level and speculate for a longer period of decline. The rules are basically similar to the SL, but with the difference that PT does not necessarily have to be set in the market, we can act differently — according to the state of the market, the indicator, for a certain time … There are many options. Your email address will not be published. Enter your e-mail to register to the free course: Register If you have account already, Log in here first.

This is best illustrated by the following figure: Use of the profit target in practice We are getting to the more pleasant part. In the next article we will talk about leverage.

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