Home Forums Trading Discussions Setting Stop Loss and Take Profit Levels.

This topic contains 3 replies, has 4 voices, and was last updated by  ravenskte 11 months, 4 weeks ago.

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  • #34586

    leoponaik
    Participant

    Hello Members,

    A friend of mine forwarded to me this message and i have decided to bring it up here in the discussion. lets hear your take on this. Advise this trader.

    I have a challenge that always gets to my nerves in that, sometimes i get to think that maybe the market has a thing for me. The thing is, i have tested my strategy it works and i believe in it. But every time i take a trade i am either knocked out and immediately the market reverses on me or when it moves to my direction, it reverses almost to my target profit. You have no idea how i am battling with this. Sometimes i am forced to take small profits because i am scared that the same thing is going to happen. But it is also breaking my heart to watch the market rally on me after closing out my trade. Should i quit the strategy or what? I need help pliz. Thank you.

  • #34641

    Eazojanet
    Participant

    Hello trader,

    Your strategy has no problem at all and the market is not your enemy. the problem might be about how you set your stop loss levels and your target profit.

    You either set your profit target too far to be hit or tight stop levels.
    When you set tight stop loss levels close enough to your entry point, you suffocate your trades
    When you set very large take profit targets, they are likely not to be hit.
    Your risk to reward strategy for your trades should be good enough to cater for volatility and take profit should be achievable.

    You should also avoid setting your targets on support and resistance levels. these are known as market reversal levels. When you set a stop loss on a support or resistance level, price has higher chances of reversing than breaking through. Therefore your target is likely not to be hit and just reverses at the exact level.

  • #34671

    Leopo
    Keymaster

    Follow the Risk management link below and learn more on how to set stop loss levels.

    Risk Management

    • This reply was modified 1 year ago by  Leopo.
  • #34695

    ravenskte
    Participant

    Hello Trader,

    It is normal to feel that way, so i should assure you that you don’t have to beat yourself about it. Most traders have gone through the same and some are still battling with it. If you have tested your strategy very well, on several times and you feel it is the one, then don’t quit on it.

    What you have to do is work on yourself.

    Learn to control both your physical and psychological reactions towards the market. What is causing you all that kind of frustration is not your strategy but you. Greed.

    Your desire to make too much money while risking very little. You expect much from the market and you want to risk less. This makes you set your stops very close to your entry point and your trades don’t get enough space for price volatility adjustments. On a single movement your are stopped out prematurely. And when you manage to escape that you never hit your target. Because your targets are unachievable.

    Having a strategy is not enough to make you money. You need to have a strategy that works. To overcome this;

    You must revise your money management strategy.
    Know how much you are willing to risk
    Your risk to reword ratio must match the market volatility for that pair
    Your targets should be achievable
    Avoid setting stops on levels of support and resistance because price will hit your stop and reverse
    Avoid trading with emotions. if you’re scared to take a trade ,don’t trade.
    Follow your trading rules

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