Stop loss and take profit strategy
Stop loss and take profit orders are essential tools for managing risk and locking in profits.
1. Stop loss order:
- Stop loss order automatically sells a position when the price reaches a specified level. It helps limit losses and protect capital.
- Types of stop loss orders:
- Fixed stop loss: Set the stop loss at a predetermined price.
- Trailing Stop-Loss: The stop loss moves according to the price, maintaining the set distance. This locks in profits while allowing the trade to continue.
2. Take profit order:
- Take profit order automatically sells a position when the price reaches a specified profit level. It ensures profits are realized before the market reverses.
- Set profit taking level:
- Use technical analysis tools such as Fibonacci retracements, support/resistance levels, and moving averages to determine optimal take profit levels.
3. Flexible stop loss and take profit:
- Adjust stop loss and take profit levels as the trade progresses based on market conditions and updated analysis.
