Foreign Exchange Trading

Take Profit

In many cases you place your take profit order to your profit target level so that you can fix the profit instantly once the market extends to it.

From another point of view, it is also possible for you to use a trailing take profit order in order to maximize your earning.

But both of the said options have disadvantages. The previous one puts a limitation to your profit if the market moves higher that what you have forecasted. Your profit will still be limited with the second option, especially when the volatility of a trend is very high. What frequently occurs is… Your current trailing take profit order might be set too near to the current price once activated, and be implemented when a slight short term pull-back occurs. You will end up loosing a big amount if your predicted profit when the market edges higher and higher later on.

I reccomend you to make use of a fixed take-profit order when you are going to open a position, and set it according to the average daily range of the currency pair you are trading which is +120 pips fir EURUSD currency pair. This approach has several advantages. Most of all is that if a great trent begins the day you enter the market, you can have a great chance that your large take profit order will be implemented.

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