Forex eur usd pip values entering a trade, how do you choose the point of the stop loss and take profit? Clearly, this decision will have an impact on how profitable your trades are.
However, did you know that the placement of youdr exit levels can actually have more of a bearing on your profitability than the decision on which direction to trade? In the volatile forex market, it is actually true. Given how important this decision is, it is surprising how little thought many traders give to this component of their trade. In this article, I want to explain a quantitative strategy that will help you select stops and take profit levels for maximum profit. I also want to debunk some of the common misunderstanding around risk-reward setups, and show how following poor advice can ruin a potentially good trading system. Why Guessing Stop Losses and Take Profits is a Plan for Failure A trading position will normally exit at one of two points. When deciding trade exits, it is sometimes tempting to make an educated guess.
Some traders use technical features such as chart candles, trends, resistances and supports. Others simply choose a fixed ratio of profit target to stop loss. When you guess the exit levels for a trade it is very easy to either overestimate or underestimate price movements. It is not repeatable and that makes it very difficult to analyze or improve performance. SL combination or because your strategy is not working.