How to Improve your Profit and Lessen your Losses in Trading FOREX
Written by admin on January 28th, 2012
Generally you determine your current take-profit order towards the profit target point so that you can fix profit instantly any time the market gets to it.
If you want to maximize your profit, you can also use another alternative by making use of trailing take-profit order.
But both options have drawbacks. Your profit will be limited ones the market moves higher tha you’ve forecasted. Your profit will still be limited with the second option, especially when the volatility of a trend is very high. Just what will happen next 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. And then, market edges greater and greater, and you just loose a large portion of your forecasted profit.
There is a better technique of fixing your profits. Stay with fixed take-profits, but always set them based on the average daily range of the currency pair you’re trading, versus setting them to the profit targets to allow much higher profits than you forecast. For example, the average daily range for EURUSD pair is normally 120 pips. So in case you trade EURUSD pair, it is best to set your take-profits not closer than +120 pips to the entry point.
I suggest you use a fixed take-profit order every time you open a position, and set it based on the average daily range of the currency pair you are trading (+120 pips for EURUSD currency pair). There are number of advantages you can enjoy with this approach. In the very first place, you can have a good chance that your large take profit order will be executed if a significant trent starts the day you open a position.
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