Take Profit may be familiar to traders, but many of them may still be confused of what it is and how it benefits trading. Take Profit may be familiar to traders, but many of them may still be confused of what it is and how it benefits trading.
This is a very significant and valuable tool that should be used to set a take profit on every order.
The definition of Take Profit
Take Profit is a setting for the system to close orders automatically and receive profit immediately. Traders set take-profit points by pips or as a percentage of funds.
Benefits of Take Profit
1. Less too much screen time
Setting a TP point saves you time from manually closing orders, allowing you to spend the balance of your time learning more about trading and improving yourself. For Forex trading, if you have set a TP point at the price that you want, when the price reaches that point, the system will automatically close the order.
2. Make profits without prejudice
When the system closes the order automatically, you’ll get the profit exactly predetermined. So you don't need to worry about the fluctuation.
Setting the TP point at the profitable price gets rid of the trader's bias because greed can make you confused and change Take Profit position. This behavior can lead to a portfolio wiped out.
How to Set Take Profit
The trader's trading strategy and technical analysis should be applied to determine Take Profit points for more accuracy. Traders should not set the Take profit point arbitrarily because it may cause wiped out.
This article presents how to place Take Profit by using technical analysis.
1. Set Take Profit by using Trend Line
By drawing up the Trend Line and looking for a point to set the TP, it is best to use Time frame charts at 4 hours or more for more accuracy.
This method depends on the experiences of each trader.
2. Set by using Set the latest high or low price
Finding support and resistance levels requires locating the lowest and highest prices on the price chart. Once the support and resistance levels are identified, the Take Profit level can also be set.
3. Set Take Profit by using signal from indicator
Using signal from the indicator to determine the Take Profit point in each order.
4. Set Take Profit based on the appropriate percentage.
Before placing an order, the needed profit or percentage must be set. When opening orders at this price, you must consider where and how much profit you wish to make before setting the TP point.
The benefit is that a trading discipline may be created, which helps to prevent greed among traders.
5. Set Take Profit based on prediction by accredited investors.
Major investors, such as large institutions or funds, are occasionally traded. Therefore, the most effective strategy is to utilize the chart with a time frame of at least four hours or the chart with a time frame of a day when entering orders by large investors and then to set the TP point in the opposite direction.
6. Set Take Profit based on Fibonacci.
The Fibonacci Psychological support and resistance setting use Fibonacci to spread Fibonacci lines throughout the chart and establish Take Profit along the Fibonacci lines to assist in finding entry points and setting Take Profit.
Profiting From Take Profit Forex (TP)
Take Profit can be used most effectively by the following principles.
1. Guaranteed profit
After the system automatically closes the order, you earn the profit as indicated, so don't worry about the chart swinging because you set the TP point.
Setting the TP point at the target price minimizes the trader's bias because greed causes hesitation and profit-taking. Finally, this action may cause portfolio wiped out.
2. Traders can avoid staring at the screen.
By setting a TP point, you don't waste time waiting to close orders yourself and can spend the rest of your time learning more about trading to improve yourself. Because if you have set the TP point at the price that you want, the system will automatically close the order when the price reaches that point.
3. Don't move the Take Profit point
If you trade till you make a profit and the graph comes close to where you are willing to take profit, you might think you want to move the take profit point because you think you will definitely make profit, but this is a bad idea.
Avoid moving the TP point frequently instead of letting it reach the profit point in accordance with the trading system you have planned since doing so will result in the loss of the trading system and may make it impossible to survive in the market sustainably.
Setting a take-profit (TP) point is beneficial since it identifies our point to close order. It enables us to continuously trade profitably and improves the accuracy of our trading discipline.
However, if still losing, you will need to learn about money management and the Forex market in order to produce consistent gains. Systematic Forex trading with obvious entry and exit points will benefit in the future.