Forex trading is a popular way to make money online, but it can also be risky if you don’t have a solid trading plan in place. One essential part of any trading plan is setting take profit and stop loss targets. Take profit and stop loss orders are crucial to protect your profits and limit your losses in the foreign exchange market. In this blog post, we will discuss some best practices for setting take profit and stop loss targets in forex trading.
Determine your Risk Tolerance
Before setting take profit and stop loss targets, it is essential to determine your risk tolerance. Risk tolerance refers to the amount of risk you are willing to take on in a trade. It is important to know how much money you are comfortable losing before entering into a trade. Your risk tolerance will help you to determine the size of your position, the stop loss, and take profit targets.
Set Realistic Targets
It’s essential to set realistic targets for your trades. You must set take profit and stop loss targets that are achievable based on the current market conditions. Setting unrealistic targets may lead to frustration and disappointment if the trade does not go as planned. It’s better to set achievable targets and take smaller profits rather than aiming for big gains that are difficult to achieve.
Use Technical Analysis
Technical analysis is a powerful tool in forex trading. It allows you to study historical price charts and identify trends and patterns. You can use technical analysis to determine your entry and exit points, as well as set take profit and stop loss targets. You can use indicators such as moving averages, support, and resistance levels to help you set your targets.
Follow the Market
In forex trading, the market is always changing, and you must be flexible and adaptable. If the market is moving against you, it’s essential to set a stop loss order to limit your losses. On the other hand, if the market is moving in your favor, it’s crucial to set a take profit order to lock in your profits.
Take into account the Currency Pair’s Volatility
Different currency pairs have different levels of volatility, and it’s essential to take this into account when setting your take profit and stop loss targets. More volatile currency pairs tend to have wider spreads, and you may need to set wider stop loss and take profit targets to account for this volatility. Less volatile currency pairs, on the other hand, tend to have tighter spreads, and you can set tighter stop loss and take profit targets.
Use Trailing Stop Losses
Trailing stop losses are an effective way to protect your profits while allowing your trades to continue to run. A trailing stop loss is a type of stop loss that adjusts automatically as the price of the currency pair moves in your favor.
For example, if you set a trailing stop loss of 20 pips, and the price of the currency pair moves in your favor by 20 pips, the stop loss will move up by 20 pips, allowing you to lock in your profits.
In conclusion, setting take profit and stop loss targets is a critical aspect of forex trading. By following these best practices, you can manage your risk and maximize your profits. Remember to always set realistic targets, use technical analysis, follow the market, take into account the currency pair’s volatility, and use trailing stop losses to protect your profits.
EUR/USD Intraday: the uptrend remains. Pivot: 1.1920
Probable development: Buy positions above 1.1920 with targets at 1.1965 & 1.1985 in extension.
Less likely but possible: below 1.1920 look for further downtrend with 1.1895 & 1.1880 as targets.
Additional observations: the RSI shows uptrend momentum.
Gold spot Intraday: consolidation in place. Pivot: 2006.00
Probable development: Sell positions below 2006.00 with targets at 1976.00 & 1966.00 in extension.
Less likely but possible: above 2006.00 look for further uptrend with 2015.00 & 2030.00 as targets.
Additional observations: the RSI is mixed to bearish sentiment.
GBP/USD Intraday: caution. Pivot: 1.3225
Probable development: Buy positions above 1.3225 with targets at 1.3265 & 1.3290 in extension.
Less likely but possible: below 1.3225 look for further downtrend with 1.3200 & 1.3180 as targets.
Additional observations: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
GBP/JPY intraday: the uptrend prevails as Buy as 139.39 is support Our pivot point stands at 139.39.
Probable development: the uptrend prevails as Buy as 139.39 is support.
Less likely but possible: the downtrend breakout of 139.39 would call for 139.07 and 138.88.
Additional observations: the RSI is above its neutrality area at 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the pair is above its 20 and 50 MAs (respectively at 139.56 and 139.26).
EUR/JPY intraday: the uptrend prevails as Buy as 125.62 is support Our pivot point is at 125.62.
Probable development: the uptrend prevails as Buy as 125.62 is support.
Less likely but possible: the downtrend breakout of 125.62 would call for 125.31 and 125.12.
Additional observations: the RSI is above 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the pair is trading above both its 20 and 50 MAs (respectively at 125.79 and 125.73).
EUR/GBP intraday: rebound towards 0.9051 Our pivot point stands at 0.8995.
Probable development: rebound towards 0.9051.
Less likely but possible: below 0.8995, expect 0.8974 and 0.8962.
Additional observations: the RSI is below its neutrality area at 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the pair is trading above its 20 MA (0.9012) but under its 50 MA (0.9027).
Dax (U0) Intraday: choppy. Pivot: 12950.00
Probable development: Sell positions below 12950.00 with targets at 12785.00 & 12720.00 in extension.
Less likely but possible: above 12950.00 look for further uptrend with 13050.00 & 13098.00 as targets.
Additional observations: as Buy as 12950.00 is resistance, look for choppy price action with a bearish sentiment bias.
Brent (V0) Intraday: bounce. Pivot: 44.90
Probable development: Buy positions above 44.90 with targets at 45.45 & 45.60 in extension.
Less likely but possible: below 44.90 look for further downtrend with 44.75 & 44.55 as targets.
Additional observations: the RSI is mixed to bullish sentiment.
High probability Market: buy positions above 1906.00 with targets at 1950.00 & 1970.00 in extension.
Possible scenario: below 1906.00 look for further downward trend with 1880.00 & 1863.00 as targets.
Additional information: the RSI is mixed to bullish.
GBP/USD Intraday: the upward trend prevails. Pivot: 1.3035
High probability Market: buy positions above 1.3035 with targets at 1.3075 & 1.3095 in extension.
Possible scenario: below 1.3035 look for further downward trend with 1.3020 & 1.3000 as targets.
Additional information: the RSI shows upward trend momentum.
GBP/JPY intraday: the upward trend prevails as buy as 139.04 is support Our pivot point is at 139.04.
High probability Market: the upward trend prevails as buy as 139.04 is support.
Possible scenario: the downward trend breakout of 139.04 would call for 138.73 and 138.55.
Additional information: the RSI is above its neutrality area at 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the pair is above its 20 and 50 MAs (respectively at 139.30 and 139.28).
EUR/JPY intraday: as buy as 125.71 is support look for 126.56 Our pivot point stands at 125.71.
High probability Market: as buy as 125.71 is support look for 126.56.
Possible scenario: below 125.71, expect 125.41 and 125.23.
Additional information: the RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The pair could retrace. Moreover, the pair is trading above both its 20 and 50 MAs (respectively at 125.98 and 125.77).
EUR/GBP intraday: as buy as 0.9021 is support look for 0.9085 Our pivot point is at 0.9021.
High probability Market: as buy as 0.9021 is support look for 0.9085.
Possible scenario: the downward trend breakout of 0.9021 would call for 0.8998 and 0.8985.
Additional information: the RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The pair could retrace. Moreover, the pair is below its 20 MA (0.9043) but above its 50 MA (0.9029).
