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    Thread: How to set Stop Loss and Take Profit Effectively?

    1. #11
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      Stop loss is an important instrument that we must use every time we open a position, I have discussed it some time ago because it is the savior of our money if the market moves not in accordance with our analysis.
      There are various comparisons to determine SL and TP
      There are 1: 1,1: 2,1: 3,1: 4,1: 5 it depends on which trader prefers to use which, if in my opinion who prefers 1: 3. so if we install SL 10pips then our TP will be installed 30pips
      And for normal SL risk i use 3% of our capital.


    2. #12
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      Using the example of a long position, the stop loss is placed under the market and the profit exit above the market as a limit order. In this case, the stop will normally be executed as a market order when the price is hit. And as you're trying to sell as the market is falling, this indicates an absence of buyers, and so depending on liquidity, you run the risk of not getting filled at the price the stop was placed at, and may have to take a worse price. That being said, when selling at a profit target, you are selling as the market is rising, indicating a surplus of buyers, which means you will tend to get filled at the price you chose. So, in general Limit orders for take profit will tend to get better execution than Stop loss orders.


    3. #13
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      i see that there are some things have more important than risk/reward ratio which can make you set stop loss and take profit effectively because opening your trade positions for example from bad points on the chart can't protect you from hitting your stop loss so i see that defining the good point firstly is the first step of setting our stop loss and take profit effectively such as :
      - Opening a buy position when a price touch a strong support line and setting our stop loss below it for not less than 50 pips because this strong support line will stop the price from breaching it and at the end it will pushes the price up again to the nearest strong resistance line which we can set our take profit on it.
      - Opening a sell position when a price touch a strong resistance line and setting our stop loss above it with not less than 50 pips because that resistance line will forbid the price from the going above it and when it pushes the price below it may reaches to the nearest strong support line which we can define our take profit on it.
      So defining our entry point is the most important step before the thinking in the best stop loss, take profit points and Risk/reward ratio because the success in reaching our take profit depends on our entry point which we decided to open our trade position from .


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    5. #14
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      How to set Stop Loss and Take Profit Effectively ?The use of Stop/Loss and Take Profit as trading instruments require skill in order to enjoy the purpose for which they are meant .First ,for the use of S/L to be effective ,you have to be able to identify correct trade entry point.This of course must be clearly defined through your market analysis ,it is important to note that any correct entry should not hit S/L of 10 PIPS away from your entry point. Although ,to be on a safer side ,10 pips may not be too good in order to give room for error of inadequate analysis .20 or 30 pips S/L is not bad . For your T/P ,you may decide to take 30 ,40 or 50 pips away from your entry point .
      Your market analysis may even locate your T/P through resistance and support region. What is important is to get your analysis right ,otherwise ,by the time your trade hit 2 or 3 different S/L ,your trading capital will dwindle faster than you can ever imagine.


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    7. #15
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      There is a popular assumption that nothing is cast in concrete in the forex market, and this means that hard-and-fast rules does not always hold. Even some time tested rules sometimes fail, yet skilled and experienced traders manages to make decent living from the forex market. This also applies to setting stop loss and take profit effectively.

      The purpose of setting stop loss is to limit your loss in the event that the price is moving contrary to the direction of your trade. This is implemented by setting the level of the stop loss a certain number of pips away from your initial entry price. Some methods of setting effective stop loss are as follows:

      Sing low and swing high method
      A simple method of setting stop loss is to place it below a swing low on the time frame you are trading when you are buying, and place it above the swing high when you are selling.

      Support and resistance level
      The currency prices in the forex market exhibit the tendency to reverse, pullback, or hesitate at the support or resistance levels. Some traders choose to place the stop loss below or above this levels.

      Trendlines
      The trendlines functions as de facto support and resistance levels, and also serves as an indication of where to place the stop loss in order to protect the trading account.

      Using the ATR
      The Average True Range also serves as a menas of setting the stop loss. A good way to use the ATR for this purpose is to set the stop loss at 2X the ATR.
      POSSIBILITIES ARE INFINITE IN THE FOREX MARKET, YOU CAN ACCOMPLISH ANYTHING !


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    9. #16
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      The forex trading platforms offer good tools which when used by the trader properly protect and enhance trading performance. The stop loss and the take profit tools are among the useful trading tools.
      Now, using these tools effectively matters for the best results to be achieved.
      Setting the stop loss:
      For every trade, the trader should be able to locate the point where the traded direction is no more valid. For example if buying at a support, then price is expected to go higher. A stop loss should be set at the break of the support. For example if a support is at 1.1400 and I brought at 1.1420, I would need to set my stop loss below the support, e. g. 1.1380.
      Setting the take profit:
      The take profit point should be some pips from a strong support or resistance depending on the order type. When a trader sells from resistance, he should place his take profit some pips away from the support. For example, if a trader sells at 1.5088, he should target close to the psychological support 1.5000, e.g. 1.5015
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    11. #17
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      Knowing how to set stop loss and take profit is extremely important for every trader, though there are many factors traders consider when it comes to where to place their stop loss and take profit such as
      Money management : this basically is extremely important, because this will enable us to minimize our loss and maximize our profit in the market. And most time it usually influence our decision.
      Trading strategy : for example, stop loss of a scalper or a day trader might be very different and so is where they take their profit, so so it's important that stop loss and take profit are base on our respective strategy.

      Risk management : this has to do with the lot size we use and the profit target we are aiming to get, and base on the market situation.
      Example of this is the risk reward ratio.


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    13. #18
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      Stop loss and take profit are quite important in forex trading and as one places trade the options are available.The best approach to know where to place this trade is by first of all having a good and objective technical analysis in place.The technical analysis or the developed strategy wold definitely point to where the stop loss and take profit should be (it is the potentials of the trade).Depending on the time frame but putting into consideration 4hr chart,the stop loss should not be more than 30 pips while the take profit about 80 pips.The higher the time frame the higher the potentials.This is known to be a part of effective risk/money management.


    14. #19
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      To set perfect Stop loss and Take profit ,traders have to gather the perfect trading experience and should have the knowledge about the market and for that they should gather knowledge with time .Here some important points should be known to the traders and they are as follows :-

      1. What type of time frame traders are using ? because here the SL and TP are set as per the time frame .

      2. What type of trading strategy one is adopting ? - Here traders can set the above parameters as per the strategy .

      Many traders are using the candlestick pattern as well as the price action and by seeing the bearish and the bullish patterns ,traders set the target with the perfect risk making by using the SL effectively .


    15. #20
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      dear friend The target profit level or Take Profit is usually determined after the risk. That is, we will first determine the limit of losses with Stop Loss, then followed by Take Profit according to the Risk vs. Reward ratio that we have planned. If for example the loss limit or Stop Loss is 50 pips, then with a 1: 2 ratio, we will determine Take Profit of 100 pips


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