In currency trading, stop-loss and take -profit holds a vital position in the strategy. If they are used properly, these can save investors from blowing their account. These are two options that come embedded with the terminal to help investors. The former tool is to prevent losses at a pre-determined position. If a person sets this at a certain point when the price hits that point the trade will be executed autonomously. This saves time and the tasks involved and offers remote control of valuable capital. The latter idea is to execute an order when the target has been achieved.
For example, you want to close the trade after making $10 profit. An individual can’t monitor the market all day long. Whenever the profit hits the benchmark, it would simply close the trade. Even if traders are sleeping, their fund is taken care of. There is another concept which is trailing profit which we would describe in this post. If you want to learn the techniques of strategic positioning, this article will help you to learn the tricks.
At first, we are going to talk about this life-saving feature. Every platform offers this tool as this can prevent a bad decision from ruining the fund. This industry is lucrative and people get delusional. Instead of making a rational choice, they start going after profits. This is when the market slowly gets out of control. When a person launches plans uncontrollably, the deposit is at stake.
Moreover, watching the chart 24/7 is impossible. Stop-loss prevents this by executing the order remotely. When placing stop loss, make sure it is not close to the opening price. Brokers will take their commission which will open the order lower than the present price. Traders should take this fluctuation into account before placing stop loss.
While placing the stop loss, make sure you consider the lot size. If you take trades with a high lot, you will be forced to trade with a tight stop and thus the trades will be under tight call. That’s why smart traders at Saxo broker Dubai always trade with low-risk exposure. They determine the lot size in a conservative way and trade with standard stop loss.
Also related with risks to reward ratio
In volatile price movements, investors need to be prepared to strategically place a stop-loss. Place it close and trade will be closed instantly. Place it far and the account will drain away. Analyze the balance, trends and make a choice depending on the risks to reward ratio. Successful implementations take into account the impacts of the risks to reward ratio on your performance.
Profit is the only goal that makes the participants coming back to this market after enduring losses. Many people ignore this method as they don’t want to limit the opportunity. However, advancing with goals has been proven to be beneficial. As traders are not engaged in tasks that are out of schedules, the growth of career is consistent. Never be greedy when placing a take profit level. Be practical and set tiny goals initially. We have seen people are targeting $10 of profit which is the entire fund. Never use leverage to make a profit quickly as this exposes the money. If a person can make $2 in every trade, the aggregated profit will be sufficient to support this profession as a full-time career. Be honest with yourself and focus on small achievements.
Trailing profit and its positioning
In take-profit, another important concept exists. That is trailing profit. For those who have no ideas, this is a plot that trails and positions the take-profit by adjusting as the profit grows. This is tricky to implement as price movement does not follow any given pattern. Initially, it is better to discard this method. First, master the basic two formulas and understand them properly.