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Stop loss forex: How to Take Profits and Stop Losses? Exit Orders


The main reason for using stop-loss order in Forex trading scalping is not to hedge open positions against sharp price movements. It’s just that without stop-losses, you can neither test nor determine the profitability of any strategy, including the short-term one. First, you determine the distance from the current price, at which the trailing stop will be located. Trailing occurs only when the market moves “where it should,” that is, AWAY FROM the stop loss, not towards it.


A consolidation is where the price moves sideways for at least a few price bars. A trade could then be entered IF the price breaks out of the consolidation in the overall trending direction. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey.

What are take profits?

Such strategies are not professional trading, they are rather a kind of entertainment, getting excitement. You enter a Forex trading position when the pattern is complete, i.e., the second candlestick should close. If you trade in the D1 timeframe, you can put a market order to enter a trade. Make sure there are no important news publications around the time you are going to enter a trade. These variants will be perfect with some trading strategies and unsatisfied with others. I personally prefer the method of setting a stop loss strategy based on the market situation in the chart.

A protective order is part of trading, and trading without stop losses is not trading in its normal sense. It is natural to insure your funds as the market price could go both up and down at any moment. As the volume of orders increases, traders shift to longer timeframes, as there will not be such a significant impact as the target profits are greater . The execution of large orders will move the price against the trader, thereby worsening the risk/reward ratio. Therefore, if the pin bar is bullish, one enters a buy trade. The closing price should be higher than the opening price, and the lower candlewick is longer.

When the market price reaches the specified level, the order will be executed at the nearest available price. Let me explain in detail a few trading Forex strategies and demonstrate how to set a stop loss in a real market situation. Because of the trailing stop, most of the profitable trades will have to mitigate risk and have a lower take-profit/stop ratio than originally planned. The potential loss can also be reduced, but the future performance of at least trend trading strategies will be poorer due to a reduction in the potential profit. The forex market can be very volatile and small losses can quickly accumulate. Protecting your capital with limit orders is crucial, especially when trading with leverage, which can amplify any losses.

Like anything else in trading, setting stop losses is a science and an art. This makes the trade management technique of “stop losses” a crucial skill and tool in a trader’s toolbox. Determine significant support and resistance levels with the help of pivot points.

It is easier to calculate the stop loss size when it is measured in price points. The stop loss size is always calculated based on the entry point. The zone of high demand, a stop loss strategy is set below. For example, when buying 100 AAPL shares at $163, the stop loss of the stock will look like a sell order for 100 AAPL stocks at $160. Next, set the desired level of your stop loss in the pop-up window.

For example, you won’t put up with a loss, waiting for the market price reversal in the needed direction. But first, you need to make sure that your trick has succeeded. As a result of stop loss hunting Forex, first, the market price should go in the needed direction . Only after that you should consider entering a trade yourself. Next, you should wait for the confirmation that a volatile market won’t go towards stop losses. For me, this confirmation is a breakout of the nearest price reversal.

Pin Bar candlestick pattern

Keep in mind that where the stop loss is placed goes hand in hand with your entry technique. Therefore, I’ll also provide a couple of entry ideas as well. This will hopefully get you on your way to generating your own strategies. Every forex trade taken should be based on a well-thought-out and tested strategy. If you won’t be watching your screen when your stop loss could potentially be hit, then you should place a physical order. Even if you can watch your screen all day, physically placing stop loss orders is still recommended.

Sign up for a demo account to hone your strategies in a risk-free environment. An ATR trailing stop loss indicator could be used to aid in this. Here is an example of one on TradingView called ATR Stops set to a 1 ATR multiplier (and 7-period ATR) on the EURUSD daily chart. If you go long you could also tuck your stop loss below a recent swing low, or below a candlestick pattern you like.

At any point, the limit price could go either up or down, this is the market law. If a trader doesn’t use stop losses, they try to ignore this law, hoping for the best. Therefore, the market analysis is not objective, so there won’t be any steady profits. Generally, it’s crucial to remember that any type of trading comes with risk, and Forex trading as well.

This locks in profit as the price moves favorably, but gets the trader out if the price starts moving too much against them. There are no general universal rules how to set stop loss or take profit. Everything depends on the trader, trading strategy, trading style, high risk appetite, and personal preferences. If you adopt a new trader’s approach and you are trading like a gambler approaching a game of chance, a stop loss may prevent you from feeling the full range of emotions. After a losing trade, you enter another one in the same direction but with a larger volume expecting to compensate for the previous loss.

forex trading

Thus, stop losses, robust strategy, and risk management plan can help you limit the downside risks, especially when using such complex instruments as leveraged trading. Moreover, to make consistent decisions it’s reasonable to seek independent financial advice from an experienced party. A stop loss is an order placed to limit the potential losses. Apart from Take Profit, an equally important pre-calculated price level used by traders today is called Stop Loss.

Inside Bar pattern

If you want to change the stop-loss parameters, click on the up or down arrows on the right or left of the chosen placement method, or you can enter the value manually. This is like not having a stop at all – it’ll only increase your risk and the amount you could lose. If-then orders are essentially two-step orders, where the second order is only created once the first has been triggered.

Stop loss on short forex position

In forex trading, everybody wants to keep the wins and stop the losses. A stop loss order is a good tool to stop losses, especially for novice traders. If we assume that some people have bought because other traders’ stop losses worked out, the stop losses of these BIG BUYERS should be somewhere BEYOND these levels. Ideally, the price should trigger the order to enter the market during the formation of the candlestick following the inside bar. Stop losses in day trading, as a rule, are placed below important daily lows or above significant highs in the chart.

Due to the emotional instability involved in watching a losing trade, a trader may simply not see this opportunity. Trailing stop often closes a position too early, as the price seldom reaches a take profit via one directed movement. Yes, the position moves and is closed with a profit, but the profit could have been several times greater. Beginners do not always understand what a stop-loss is, as there are sometimes inaccurate descriptions of its work principle. Many traders think a stop loss is unnecessary, considering it a measure for cowards. There are often recommendations like “Set a stop loss to limit potential losses.” But most inexperienced traders believe they could avoid significant losses.

If there is no opportunity to fill the order within this range, then the order will not be executed. After all, do not forget that all these manipulations do not guarantee that your own stop loss won’t be triggered. It might not have been the stop loss hunting Forex but a spontaneous market movement. For sell trades, you set a stop loss above the second candlestick . You set a pending order once the inside bar has completed, the second candlestick has closed.

I do not persuade you, of course, the choice is up to you. Their brains learn to analyze such a situation in the market objectively, to accept that the price may not go in the desired direction. But the price could well go down by 10 pips from the entry price and continue falling. Or it may first go down by 10 pips and then surge by 30 pips, which will be equal to an increase of 20 pips from the entry price.

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