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RoboForex - roboforex.com: overview, news and analytics
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[QUOTE="RoboForex Team, post: 329882, member: 105160"] [B][SIZE=5]How to Use Stop Loss and Take Profit: Learning to Place Orders to the Charts[/SIZE][/B] [CENTER][img]https://blog.roboforex.com/wp-content/uploads/2019/07/stop-loss-i-tejk-profit.png[/img] [B]Dear Clients and Partners,[/B][/CENTER] The Stop Loss and Take Profit orders act as insurance, being reverse orders in essence. If, for example, a pair was bought, when an Stop Loss or a Take Profit is triggered, a reverse trade (selling) is carried out, locking in profit (if the TP is triggered) or Loss (if the SL is triggered). [SIZE=5]What is Stop Loss and Take Profit?[/SIZE] A Stop Loss (SL) is a protective order that limits possible losses of the trader in an open position. It automatically closes the trade when a certain level or amount of losses is reached. A Stop Loss is placed either to limit losses or to lock in profit. In the latter case the order is placed in the profitable area. A Take Profit (TP) is an order locking in profit without the trader’s participation. The order automatically closes the trade when the price reaches a certain level. Both Stop Loss and Take Profit must be placed in accordance with the trader’s strategy. For your trading to be stable and successful, these orders are obligatory. The Stop Loss minimizes losses and enhances risk management. Almost all trading strategies include the use of an Stop Loss and/or a Take Profit. Each trader has their own criteria of money management (MM) that tell them how much they can afford to lose in each trade. This is the strategy telling where to place an SL and a TP. [SIZE=5]How to place a Stop Loss?[/SIZE] The trader defines how much they can lose, according to the MM, if something goes wrong. The strategy tells them where the Stop Loss should be. [B]Placing Stop Loss and Take Profit in a Pin Bar strategy[/B] The trader is using the Pin Bar strategy. At the top of an ascending impulse, there has formed a Pin Bar pattern, and the trader is planning to open a selling trade. In this case, an Stop Loss will be placed behind the maximal value of the signal candlestick. The landmark for a Take Profit is the nearest support level. The possible profit to loss ratio in this case is 3:1. In the first picture, you can see where the SL and TP must be placed by the trading strategy. [img]https://blog.roboforex.com/wp-content/uploads/2020/02/stop-loss-and-take-profit-2.png[/img] The Stop Loss is usually calculated in points from the entry to the trade, accounting for the sum of affordable losses, expressed in the basic currency of the deposit. The trader must calculate the price of a point and then place the volume. For example, the Stop Loss is 40 points, the available loss is 100 USD; 100 USD/40 pips = the price of a point is 2.25 USD. Hence, the size of the trade is 0.25 lot. With risk management, the trader can control risks. For example, if they receive a signal with a profit to loss ratio of 1 to 1, the trader should think twice before entering this trade. An optimal profit to loss ratio is no less than 3 to 1. [B]Placing Stop Loss and Take Profit in a Pin Bar strategy - 2[/B] In the picture, we can see a complete Pin Bar, and if we calculate the trade by the strategy, we will see that the nearest support level is as far away as the Stop Loss, which gives a 1:1 ratio. So, we can filter out this signal as it does not comply with the MM. [img]https://blog.roboforex.com/wp-content/uploads/2020/02/stop-loss-and-take-profit-3.png[/img] [SIZE=5]How to place Stop Loss and Take Profit automatically?[/SIZE] At present, there are a lot of programs for the trader to live easier. While before the Stop Loss and Take Profit were to be placed manually, and if they were to be changed, the trader had to modernize the order in several steps, nowadays, the things have become much simpler. It is enough to left-click the order on the chart and drag it to the desired price level. Depending on the direction in which the order was moved, an SL or a TP will be placed. There are scripts and expert advisors that automatically place the Stop Loss and Take Profit levels by the set criteria for each new order. On the Net, you can find an advisor called Auto-MM with a short user guide, which calculates the trade volume and automatically places the Take Profit and Stop Loss. [I]Read more at R Blog - RoboForex[/I] [B]Sincerely, The RoboForex Team[/B] [/QUOTE]
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