Some people ask me about this, what is the appropriate value for Take Profit (TP) and Stop Loss (SL). Now I want to ask readers, how much do you put TP and SL? No SL? It's worse.
Trading without SL is like trading without Money Management control, you do not know how much you are willing to lose, there is no trading plan. Maybe you just trade by gambling, when BUY, hope the market follows you up, when the market does not follow you, you do not know where the way out. BUY will turn into BYE BYE.
Similarly SELL, when your SELL hopes the market follows your hunch, goes down, what will happen if the market does not follow you?
No SL. You want to wait until when, or how much are you willing to lose? Many traders are very happy to enter BUY or SELL but do not know the way out.
When you do not know the way out, it means you do not know how to make a profit.
When floating profit, you do not know when and how much appropriate amount you need to take right? So you need to have TP and SL, according to your analysis.
Here are some tips I can share.
My Stop Loss is in the place of a trend change, meaning if I hit the SL I can know and believe that the trend has changed. This is the key.
Let's say if the market has moved far from the place to enter the order that has the right SL rate, and I just have the space to look and analyze the chart, the movement has moved far from the SL point which is the turning point and given the SL TP ratio which is not pretty, I will not pursue such trading.
I will wait for the new setup. Forex is 24 hours, where do we really want to trade? Tomorrow is still there, your promise to control your risk.
I will wait when I can calculate that SL is smaller than TP, at least 2-3 times.
For example, if my Take Profit is about 150 Pips, my Stop Loss is about 40-50 pips from the entry point. If more than that, I will wait for the new setup first.
This technique will give you an advantage in terms of LUCK as well as logical mathematics. Let's say in a month you do 10 trades, which is ten times you open an order.
Each open order TP is 3 times larger than SL. According to the ratio if your calculations and analysis have a good percentage of 50% accuracy.
You will get 5 times TP and 5 times SL.
Calculation:
5 times Take Take Profit = Profit 150pips x 5 = 750 pips
5 times hit Stop Loss = Loss 50 pips x 5 = 250 pips
Profit = Total profit minus total loss = 750-250 = 500 pips
You still maintain a profit, don't you think?
So your technique should be able to give SL and TP rates like this as soon as you enter the entry point because this forex market does not always follow you.
Profits and losses are normal, but you need to play smart with your LUCK. What if everyone gets SL? In 10 trades all hit SL.
That means your technique is wrong and needs to be fixed. This is the system of people saying trade base on rate ratio. 3: 1. - This technique is closely related to the swing/intraday technique and not scalping yes.
Do not believe it? Take a look
