A lot of my students have asked me about where to place their Entries, Stop loss and take profit targets. So I thought why not just make a video about it and share with you all how I calculate these things.
Firstly it is not rocket science, you just need to understand your risk appetite, basic maths, and what you are comfortable with.
Let’s start off with Entries
I showed various examples in the video. I enter trades 10 pips below or above a psychological level or the area where I’m looking to enter. This increases the likely hood of you catching the trades. I have had many trades miss my entries in the past and still do from time to time but not so much now just because I tried to be very safe with it and follow the textbook style. You have to think differently. The EURUSD was a great example where I saw many members miss it in the forum just because the entry was at the parity level of 1.0000 or just above it. 1.0000 is a huge psychological level and most traders in the world are paying attention to it as it’s the most traded pair in the market. I had my order just below it and just about caught it. If I had the order slightly higher I would have definitely missed it.
This can be very debatable and depends on your risk appetite. You might want to have a bigger stop loss but a smaller lot size. Some prefer having a small stop as they don’t want to risk a lot. I prefer putting my stop above or below a structure i.e the last high it made if I’m looking for shorts or the last low it made if I’m looking for longs. The market won’t break structure unless it wants to change direction which is why putting your stop in these areas increases your chances of not getting taken out. Watch the video to see how I have managed this with different trading pairs.
Finally, take profit targets. For this, I go on the 4HR timeframe and I focus on where the price has reacted the most. If I’m selling I look at where the price has reversed and buyers have stepped in to push the price higher up. Alternatively, for longs, I look at areas where sellers are stepping in to push the price back down. These reversal points are usually where traders take their profits hence why you see a reaction at these levels.
However, don’t get tempted to take your profits or close the trade very early. This is different and it’s probably because you are watching the shorter timeframes and seeing price reversing. There is a lot of noise on shorter timeframes. Remember set profit targets when you plan your trades. You need to have at least 1:2 risk-reward before placing a trade. For example, if your stop was 50 pips you would look to take partial profits or close the trade at 100 pips. If you think the trade can go further then you could close half your trade at 100 pips and leave the rest to run.
As always, remember correlation!
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
I have explained the rest of the points in my video which you can watch below