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

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, in case you don’t already do so. That way,
you’ll be able to watch all my past videos; all my educational material in
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on Instagram and of course Facebook if you follow us on Facebook you can watch
me stream live every Monday 2 PM London time where I map out trading
opportunities for the week ahead. 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’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 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 you don’t already do so, follow us on
Instagram, and indeed, Facebook, and of 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 opportunities for the week ahead. If you
want to try out this Risk Management Trading tool, do come and join us at as well. Could also see me stream live, as well as my Co-streamers throughout the trading week. Until the next video, happy trading and
good luck!

37 thoughts on “How to Place a STOP LOSS and TAKE PROFIT when Trading Forex!

  1. So clear and simple! I'm no expert but I've never had it explained this clearly! Thank you very much!

  2. I feel that you are a good man and a good teacher 👍 respect for you i understand a lot 🙏 from you thanks from heart 💓 to ❤️

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  4. Stop-loss orders are a critical money management tool for traders, but they do not provide an absolute guarantee against loss.

  5. When you get the right recipe you get a tasty food that what forex trading is all about. You don't jump into it. It's not a video game.

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  7. Good tips but would be good if you could go slow on how you place the support/resistance and how that truly influences the order we going to make. Also, beginners might have trouble with the actual order place using other tools.

  8. Is it possible to pre set the stop loss cause I'm a fundimental trader and its difficult to place a stop loss because the market is moving to much so all in all can I place an order and have 10 sl instantly

  9. Making profit is what every investors want, when you're investing and not making good profit only losses it definitely becomes a waste of time and capital for you. Forex Trading has made a lot of people wealthy and equally destroyed a lot others

  10. Love this kind of videos with simple explanations. Very self-explanatory

  11. Thanks for sharing this, Andrew. Please pardon my question as I am totally new to Forex trading….What risk management software is this?

  12. I most say, this video is practical. Stop losses generally aid protect funds from losses as the name implies. Yet, it isn’t the best tool to achieve such a feat.

  13. Can anyone please explain how to get the “180 hour buffer”? Why is it 0.12 pips? I know you look at the number next to ATR(14), but how do you calculate this? What is the derivation? 180 hour implies 7.5 days, but the mini chart shows 5 November to 14 November, which is longer than 180 hours or 7.5 days?

  14. Best Entry + Take profit + Sl Watch this video

  15. Hi THere Andrew My name is joe from South Africa JHB sorry to say that i signed up for a course and paid R18000.00 and all i got was a CD and a small booklet and very little to no help from them at all with a lot of useless promises
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  17. what i dont understand is why you use the closing price for the chart? It may have some meaning in the Daily Chart (because that is when the exchange closes) but surely not on the 4 Hour Chart, let alone lower timeframes. Why do you not use the Highs/Lows in lower timeframes than the daily? For my understanding Opening and Closing Price of a Candle in timeframes lower than the Daliy are complete random. The prices of a candle that are not random (or arbitrary) are the highs and lows in that period.

  18. It takes one unexpected large gain/drop for you to learn to use stop's haha

  19. Very instructive video !! Thanks Phil Collins ^^ …. Easy Trader…..

  20. Hi, I will like to ask, normally I trade on my cell phone but if I want to buy a computer, how should I start what should I get ?

  21. i do it easier, using a line chart without zoom and taking biggest pullback within this trend.

  22. I have been trading forex for 5 years now i went through the rookie mistakes emotions,greed,fear and luck.After 3years I became very consistent and I trade 4 to 6hours a day sometimes just three depending on market conditions,you can make a ton of money from the forex market but ask yourself this question.Are you prepared to lose money and go through the trials to become a consistent professional?

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