HWhen setting trades that have high volatility, anything can happen, and usually faster than expected. While the benefits of Stop Loss are wildly debated, most traders see the value in setting Take Profit when opening a trade. But where should you set your Take Profit? Keep reading for a clear strategy to consider when opening your next order.
For this example, we will create a range for a 24-hour trade, but if you feel the pair you are targeting offers a long-term opportunity, define your range based on how long you intend to keep the order open. We will talk about a Buy order, but this simplified analysis can be used for Sell orders too.
Go to your Market Watch and choose a symbol. Drag it over to the chart area and you’ll get its chart. To begin with, consider viewing the price on a 1-hour period (H1).
Traders’ tip: Mouse over the chart’s x-axis (date/time) and drag or slide left and right. This action will zoom in and out so you can match your preferred period perfectly.
For a one-day trade, draw two horizontal lines across the last 24 hours of movement. The top line should show the strongest price of the day, the bottom one should show the weakest. Now you have a range of movement over 24 hours. This is your base range. The price can, of course, far exceed the base range, but this generally occurs because of a news release.
If momentum is holding and there are no signs of slowing, calculate the difference and add it (for a Buy order) to the current price. This will show you the high expectation for Take Profit. Remember, the longer the period intended for your order, the longer you should track the range.
Some traders insist on being consistent with trading strategies, but newbies often misunderstand and start trading with an almost robotic action plan. While you really should create trading routines, the markets are most definitely not consistent. Consider setting Take Profit between 50% and 100% above the range. Don’t be consistent with this level. Base each decision on what you see on the chart.
This is a simplified version of where to set Take Profit. Once you’ve got the hang of it, start considering how quickly prices move as well as by how much. Bitcoin often has ultra-rapid rallies, a period of consolidation, followed by a flash crash. Get to know the pair you’re trading and you’ll start to see patterns. Practice every day by making predictions and check the results later. You’ll start to develop a routine and even an instinct for where to set your Take Profit. When you can do that, you’re thinking like an experienced trader.
Start predicting prices with Exness’ trading platforms!
Not sure how to get started? No problem. Follow this step-by-step guide.