What does stop profit mean?
Stop-Profit/Stop Profit, also known as Stop-Profit/Stop Profit. —-It is to place an order to ship at your target price, and stop loss is to place an order to ship at a price where you can bear the risk of loss. The concept of taking profit is to close when you see a good profit, not to the highest profit. The center of thinking is a “stop”, thinking determines action, and the method of stock trading is essentially different. The key to profit is to find a good opportunity. When an opportunity appears, it will be blocked at the first time. If it is missed, let it be missed (the key to whether the renewal can be played). Look for another opportunity. When converting the signal, let go the first time…
What does STOP loss mean?
Stop Loss, Stop Loss refers to an order to close a position when the loss of an order is higher than the loss price you set. Stop loss is a point limit. When the stop loss price is reached, the order will be closed. Please note that when setting the stop loss price, you need to reach a certain stop-loss distance based on the current price. When the market trend is not good for you, setting a stop loss can reduce your loss. The stop loss point is always set below the current buying price of long orders or the current selling price of short orders.
Why is stop loss important?
Traders who do not set stop losses are mostly closer to the market to monitor trends. Regardless of whether the market is favorable or unfavorable, the market will make a judgment immediately to decide whether to arbitrage or stop loss. But is this really the case? In fact, when these traders make a decision, profitable trades are often closed out early because they are worried about taking back the gains, but losing trades are unwilling to plead compensation. They are constantly looking forward to the day when the price pulls back, causing the snowball to roll bigger and bigger. Funds collapsed and lost money. This verifies the truth of “entering the market because of greed and exiting because of fear”. In the long run, it is a small profit and a big loss, and this is also a problem that most traders worry about.
The problem is here. Generally, what happens to us is that when we look at the right market, once we encounter some short-term headwinds, setting a stop loss may cause us to leave the market during the shock, or miss the profit of the natural run of the market. .
However, we cannot always accurately determine which time is a short-term headwind. If you don’t set up a set of stop-loss mechanism, in the medium and long term, the better situation is equal profit and loss, and those who can make a lot of money are likely to run into luck. Only if we design a set of stop-loss standards that are suitable for ourselves, and regularly invest it in actual trading, and effectively control the risk of large losses, then we can pursue steady profits for a long time. When you make money, you can make big and small profits, and losing money is always just small losses, filtering out big losses.
Therefore, how to set the stop loss is the most important thing.
How to use stop loss and take profit in foreign exchange transactions
How to use stop loss and take profit in foreign exchange transactions
The first thing traders should consider is that the stop loss must be placed at a reasonable level. This means that a level will notify the trader when the trading signal is no longer valid, which is actually meaningful in the surrounding market structure. There are some tips on how to exit the transaction in the correct way. The first is to let the market reach the predefined stop loss you set when you entered the trade. Another method is to manually exit, because the price action has already generated a signal for your position.
It is important to know how to calculate stop loss and take profit in foreign exchange, but it is crucial that the exit may ultimately be based entirely on emotion. For example, you may end up manually closing the trade just because you think the market is about to reach a stop loss. In this case, you will feel emotional because the market is going against your position, even though there is no manual exit based on price action.
The ultimate purpose of stop loss is to help traders stay in the transaction before the transaction is established, and the original recent direction deviation is no longer valid. The purpose of professional foreign exchange traders when setting a stop loss is to set the stop loss at a level that allows the trading space to move in order to benefit the trader.
In essence, when you determine the best position to set a stop loss, you should consider the closest reasonable level that the market must reach to actually prove that your trading signal is wrong. Therefore, stop-loss traders want to give the market breathing room and keep the stop-loss close enough so that they can exit the transaction as soon as possible in the event of an unfavorable market. This is one of the key rules of how to set stop loss and take profit in foreign exchange trading.
Many traders shorten their short positions by setting stop losses too close to their entry points, simply because they want to trade larger positions. But the trap here is that when you set your stop loss point too close, you are actually invalidating your trading advantage, because you need to base your trading signals and current market conditions, not how much money you expect to make To set the stop loss point. So it can be seen how to calculate stop loss and take profit is very important.
Therefore, your task is to define the stop loss position before determining the size of the position. In addition, your stop loss position should be determined by logic. Don’t let greed cost you.
How to set profit target
Frankly speaking, the most feasible way to set stop loss and take profit in foreign exchange trading may be the most emotional and technically complex aspect of foreign exchange trading. The trick is to exit the transaction when you make a substantial profit, instead of waiting for the market to be against you and then exit out of fear. The difficulty here is that when you make a profit and benefit you, you will not want to exit the transaction because it feels that the transaction will continue in that direction. Therefore, setting a reasonable take profit target will also help you reduce some losses.
The irony is that not exiting at the moment the transaction is beneficial to you usually means that you will exit emotionally because the transaction falls back to your current position. Therefore, when setting stop-loss and take-profit in foreign exchange trading, your focus should be to get a substantial profit, or use a ratio of 1:2 or higher when the risk/reward ratio is available-unless you pre-defined it before entering, Will try to further develop the transaction.
Profit target allocation-the meaning of stop loss and take profit
After determining the most reasonable stop loss position, our attention should turn to finding a reasonable profit target position and risk/reward ratio. It is important to ensure that the appropriate risk-reward ratio is feasible for the transaction, otherwise it is definitely not worth taking. Therefore, you must determine the most reasonable position of stop loss, and then continue to define the most reasonable position of take profit.
If after doing so, the transaction may have an appropriate risk/reward ratio, then the transaction may be worth considering. This is the meaning of our stop loss and profit setting.
Nonetheless, in this case, you must be honest with yourself-don’t ignore key market levels or obvious obstacles in reaching a satisfactory risk/return ratio, simply because you want to enter the trade. Also, don’t forget to use the correct stop loss/take profit ratio. You have to analyze general market conditions and structures, resistance and support levels, the main turning points of the market, lows and highs, and other important elements. Only in this way can we play the role of stop loss and take profit in foreign exchange transactions.
Try to define whether there are some key levels that will constitute a logical take profit point, or whether there are certain key levels that will hinder the path of trading to obtain sufficient profits.
The importance of stop profit and stop loss
The foreign exchange market is inherently volatile, and large ups and downs will cause investors to hesitate. There are still many investors who know that the trend has reached the stop-profit and stop-loss level, but there is always a psychological result that it will rise or fall a little more, leading to the stop-profit and stop-loss out and miss the best stop-profit and stop-loss. Great time.
Stop profit is to reach your expected profit point, and you will receive a satisfied mentality; stop loss is a measure of self-protection in order to not lose or lose more.
But there are many times when stop loss hinders profit, and sometimes abandoning stop profit leads to loss.
Setting stop loss and take profit is conducive to foreign exchange transactions
Basically, every transaction is a business. Weighing the risks and rewards of the transaction, and then deciding whether it is worth it, is crucial. In foreign exchange trading, you should consider the risks and potential returns of the transaction, and whether the transaction is realistic and feasible according to the surrounding market structure. In order to trade more profitably, it is a prudent decision to use stop loss and take profit in foreign exchange.