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Take profit on Forex. The best ways to set Take Profit
From selecting the method of setting the Take-Profit order (TP) depends on the efficiency of the transaction concluded on the market. On the one hand, it is not profitable to close a small profit when the market movement in "our side", and on the other hand, too large a value will not be achieved.
Today we will discuss the nuances of the installation of the take profit orders on the different ways of Forex trading. Since there is no universal method of placing take profit for all methods of trading, we have to consider the various options that may be suitable for one of the methods of trading on Forex.
Imagine that you are working on the market in the direction of the trend with high time frame for example H4. In this case, the use of a tool such as trailing stop, it is justified to close the deal with a profit. Now imagine that you are scalping intra-day, chasing 10-20 pips, unless it will make sense in this situation to use the same tool?
Within this theme, we cannot judge which option trade most effective, but we are interested in how to set the take profit in other trading circumstances.
Main ways to set Take-Profit order:
• fixed value in points, for example, taking the magnitude of the Stop Loss;
• closing profit when signals trading systems (single input and output);
• placing orders near the level (level);
• the size of the profit, based on the average volatility (average value during a certain period);
• transaction support trailing (profit-taking at the turn of the market);
• division of profit for a few purposes.
Take profit - the establishment of a fixed value
Typically, when a trader decides to set limits on profits a fixed value in points for each transaction that is out of the timeframe on which you want to work with, and takes into account the volatility of the instrument (currency pair). In this case the Take Profit is often taken the same size as the Stop Loss (SL) or simple proportion.
Example 1. Working with the currency pair GBP/USD, people may decide that in his day trading of TP will be equal to SL is 40 pips. This means that at the conclusion of each transaction will be equal to TP 40 pips as SL.
Example 2. Not a few traders who think that the take profit must be bigger than stop loss is at least 2-3-4 times (how many times it is more, it is dependent on personal views of a trader). In this case, for example, TP = 2СЛ = 40 points, therefore, CL = 20 PP.
The choice of this option Take Profit is hardly optimal for any trade. Good results are obtained only in the case if a trader has a system with very high quality search algorithm entry point, which will "pull" the entire trade. In fact, such a situation is a rarity.
Trading results depends on several factors:
• optimal for our system search the entry point (to good inputs the number surpassed failed);
• placing a reasonable stop loss (principles of installing it - a separate issue);
• the best placement of the take profit for our system.
If we are the second and third paragraphs just fix, not adapting to the market conditions for each of our agreement, then the entire burden falls on the first point - the entry point. As You know, this is not a productive approach, because we lose the opportunity to improve the result of currency transactions, locking both orders (SL and TP).
The signal system is Take Profit
Consider this option the closing of the transaction on the example of popular and very simple trading system based on using two middle line (Moving Average) with different periods, e.g., 25 and 50.
First, about the essence of the system: we take two Moving Average with different periods (25 and 50). Each intersection of lines is a signal at the conclusion of the transaction and the closing of the previous position. In the illustration above the red average line is period 25, and the blue curve is a period of 50.
At point 1 on the chart is a buy deal. At point 2 the first position closes and immediately opens the sale. In point 3 recorded the result in the second currency transaction and offers purchase. In this way the whole work on this system. Naturally, when a strong market trend, such a trading principle effective, but when it's flat, the loss will be accustomed to profit.
Typically, the signal to open positions contains a number of filters are required to reject questionable entries into the market. A side effect of these factors is to delay the signal. If the same method apply when the transaction is closed, we can obtain the output of unfavorable currency transactions.
Related other ways to set take profit in Forex You will find by following the links below.
Optional: Take profit price level in the foreign exchange market
Right setting take profit with the division of market goals
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| Category: Forex | Added by: (05.11.2017)
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| Views: 418
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