How to Place a STOP LOSS and TAKE PROFIT when Trading Forex! - YouTube

Entering a trade in the Forex market is easy. All you need is one of those, and a

couple of those, and away you go! But it's exiting the trade that counts.

So today we're going to talk about the best place to place your stop loss and

take profit targets. Hi there I've had lots of requests over the last few

months from followers asking me to give my take on where to place your stop loss

and take profit targets. So that's exactly what we're going to be talking

about today. Before I forget, let me remind you to subscribe to the channel,

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So stop loss and take profit levels- it's got to be the number one question.

Probably the most important, and certainly the most account defining

question out there. (where to place your stop loss and take profit targets). First

of all, for those that are unfamiliar with what a stop loss, is it's basically

an order that's associated with an open trade or a position in the market and

it's designed to get you out of a losing trade at a predetermined level or a

predetermined financial amount, to prevent any further loss. That's why it's

stopping any further loss, it's called a stop loss. And take profit target clearly

as it says on the tin is closing out a trade and banking a profit. Now, there are,

I think two schools of thought as to whether you should be using a stop loss

at all. For me, and this is my personal opinion, you should always be using a

stop loss. Especially when you're starting out in training even if the

stop loss has the sole intention or protecting the account for one of those

Black Swan events. One of these events that was just not expected. As we know,

trading is a very emotional business and it's our lack of discipline that causes

most traders to fail. I've often heard the educators out there, I've got many

books up there, saying the same. You should always trade without emotion.

That's great, but it's not only possible. Certainly, for me anyway. But what I think

you can do, is avoid those situations that adversely affect your emotions. So

let's assume, now, you've done your analysis. You've placed your trade, you've

already accepted the risk on the trade. If you can't accept the risk in the

first place, then you shouldn't be taking the trade. Now, if you don't know what the

risk is, if you haven't placed a stop, you have no control over that risk and

therefore, the emotions can kick in and take over. And remember it's the emotions

that end up blowing most accounts. Now, if you've been following me over the last

few years or so, you'll know that I keep trying to drill into the traders,

the importance of having a trading plan. Which as you know, is basically a set of

rules fitting around a strategy that's being back tested and has been proven in

the past. Now, if the strategy rules are met and

you enter a trade in a particular direction, because the statistical

probability is in your favor, but then the trade turns against you and doesn't

perform as expected, the idea is you should be cutting your losses and moving

on. Basically, the premise of the trade is over. So why would you be still in that

trade? Now, before we head over to these screens, let me say this, no one likes

losing money in the markets. Doesn't matter who you are. I certainly don't

like losing money in the markets, but I've learned to accept it.

Losses are part of our business. In the same way that a supermarket; it doesn't

like to have to throw out produce, as it passes the sell-by date but it has to. It's

part of the loss of running the business. But the idea of using a stop loss is to

place the stop-loss where you don't expect to get stopped

out, of course. It's not gonna be possible with the time but using some basic

skills can prevent many stop losses from happening. In the same way, that the

supermarket won't be loading up with fresh turkeys and cranberry sauce in the

middle of summer because he knows that's not gonna work. So, let's now jump on to

the screens and I'll show you exactly some tricks on how to place stop losses

and take profit targets. Come on! Okay, so here we are on the screens.Now, if you've

been following me for the last couple years or so indeed. If you are already a

member of the Forexsgnals.com's Trading Community, you'll know that I always

encourage traders to view the markets using the top-down analysis approach.

What do I mean by that? Well, what I basically mean is, if you're trading off

a particular time frame- be at the 1 hour, of the 4 hour, the daily, you should

always be looking for confirmation on at least the timeframe above and preferably

the second time frame above, as well. So for example, if you're looking to trade

in the 1 hour time frame, you should have confirmation on the 4 hour

and the daily. If you're looking to trade on the 15-minute time frame chart, then

you'll have confirmation on the 1-hour and perfectly the four-hour as well. And

I use the exact same analysis approach when looking to decide where to place my

stop loss levels and my take profit target levels. Also have a rule that will

leave no ambiguity as to where these should be accurately placed. So let's

have a look now. Okay, so you can see here on my charts, we're gonna be looking at

the Australian Dollar against the New Zealand Dollar, and I have three charts

for even time periods on my screen. Over here, on the right, we have the daily, then

we have the 4-hour, and then we have my trading screen which is going to be the

1 hour time period. Now, the first thing that we need to do is drill up to the

higher time periods and plot in our key levels of support and resistance. Now,

these are going to form the basis of where we're going to place our stop loss

levels. The higher time period charts, normally the support and resistance

levels are much more respected. So let's start off by looking at the daily.

Now, the other knack that I use when plotting mysupport and resistant

line levels, is to use the line chart. The line chart ignores the price extremities

of a particular time period. It only looks at the closing price and I'm looking for

levels on the daily chart, that *inaudible* a couple of times at

least, or indeed big swing turning points and we place it in our levels of support

and resistance , like this.

Now, once you've done that on the higher time frame, you drill up to the next time

frame -up from the trading screen or the trading time frame that you're involved

in. So now, we'll be looking at the four hour and do exactly the same. Now, these

support and resistance lines. These are not set in stone, that's why I put them

on a broken line just to remind me that they're not insurmountable levels.

They're just key levels that we need to be watching, and the knack is not to

place too many lines. Too many lines of support and resistance will mean that

you'll be paralyzed, and will be taking any trades at all. Now, once you've

spotted your support and resistance line levels on the higher time frame charts,

you go back to your trading screen. This is where you'll be taking your signals

form. So, in this example, it's going to be the one hour chart. Now, you'll notice

here, in the top left, I have applied this risk-management tool from forexsignals.com.

The Risk Money Management tool is free to all our members. Download this, plug it

in to your platform, it's going to control the risk for you.

You can see here the maximum risk on each trade. I've set it at half percent and

then of course, you can move the stop loss levels and the take profit target

levels, and indeed the yellow line is the entry level as well. So you see here on

this chart we've got a descending trend. The the trend is moving down, I may wish to enter

this trend to the downside that's what my strategy is saying, for example. So I'm

waiting to a pullback. We see a nice little pullback in now, and I'm looking

to enter this trade. So where do I place my stop? Okay so I drill up now to the

higher time frame and look for the key level that could indicate if it reaches

that level. That this pullback could end up to be a reversal, the premise of my

trade will be over, I want to exit. So you see here the next level of resistance to

the upside comes in at this level here at 106.90. Now, I'm not going to use the

textbook standard 2-pip buffer. What I use when I'm placing my stop loss levels

is a buffer of 180 hour on the trading chart that I am on. So for example, you're

looking back over here to the left you'll see that the ATR on the one

hour is 12 pips. So 12 pips buffer would make my stop in at 107. 02. So, that is now

where my stop will be placed. Comes in at 107.02-which is about there, and my

profit target is going to be set in accordance with my strategy rules. I will

always look at major support and resistance again on the higher time

frame to make sure that my take profit target isn't just a few pips, the other

side of a key level. Again, back to the high time period chart, I can see that I

have no real support to worry about on the 4-hour. I can look on the daily and

see my next level of support comes in at 105.77, so I can put my take profit

target in just above there. I can look here on the risk management tool. And

seeing that I'm getting better than 1- 1 risk reward ratio that fits in with my

strategy so I will be placing that trade and this

tool is going to work out the exact lot size for me, as well, And that places the

trade for me. Now, this is just a demo account so I will not worry about that,

but I'm just giving you an idea of exactly how this risk management tool

works. And how I decide where I place my stop loss and take profit target level. This is just a trend following trade. Same works for counter trend as well.

Looking at the higher time frame at the major support and resistance levels and

using a buffer of 180 hour on the trading time period that you are using. Always

ensuring that you're getting at least a one-to-one risk reward ratio which you

can do by using this tool here. Remember, when trading a strategy, the trend

continuation counter trend or range trading if the market doesn't behave as

a strategy intended, then it's time to cut out using the key levels of support

and resistance, plus the buffer of 180 hour ensures that

if you get stopped out, chances are the trade premise was over. Okay so hope you found

that useful. Hopefully, now you're not going to get stopped out as much as you

did in the past using a buffer and the hyatt time frame analysis . If you liked

my video give me a thumbs up, if you didn't give me a thumbs down. Don't

forget to leave a comment and of course don't forget to subscribe to my channel. If

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course if you follow us on Facebook you can watch me stream live every Monday 2

PM. London time-absolutely free to attend. Well I'll be discussing market

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Until the next video, happy trading and good luck!