Forex Trading Setting a Profit
It’s interesting to note that although are correct in most of there Trading predictions they often end up losing more than a gain The reason is simple: make less on the winning positions and they lose more on the losing one’s That’s why, when investing in any kind of channel you want To keep a eye on the bottom line, is it worth your while And are you actually making any money, we do this on two levels.
Overall monitoring and controlling each specific trade In short you profit loss ratio, in Forex it’s quite easy To determine your win-loss ratio both in general And for each trade, see how your Forex account is treating you Simply divide your total gained over a certain period by the total number of Winning position you place during that same time Then divide your total losses by the number of losing positions The ratio between your average wins per trade and your average Losses per trade is your overall profit loss ratio.
Now when it comes to placing a trade you should set your profit loss ratio as well You do that by setting take profit and stop Loss orders, the distance of each one of these from your strike prices That positions profit loss ratio lets take a look at the following chart: The support level at the moment is down here and the resistance is up here Your base price is your strike price that’s the value of which you opened your position Minus the spread, your stop loss and take profit borders should be somewhere near the Support and resistance levels Respectively now you have to decide at
What price you want to open the position If you do so here equidistant from your orders You profit loss ratio will be one to one, put it up here Two-thirds of the way from your potential loss and one-third of the way From your potential profit and the ratio is two to one not brilliant For every pip of profit you could get you stand to lose two now move it down Here where it’s closer to the stop loss and to the take profit And you have altered your ratio to one to two for every two pips of potential profit You might lose one, a vast improvement.