How do I set a stop loss and profit each trade well?
You need a risk management strategy
Step 1: Set a stop loss
- Do not risk more than 1-2% of your capital in a single trade.
- Example: If your capital is $10,000, set a stop loss between $100-200.
2. Set a target profit:
- Target a profit-to-loss ratio between 1:2 and 1:3.
- Example: If your stop loss is $100, set a target profit between $200-300.
3. Use technical analysis:
- Set support and resistance levels to accurately set your stop loss and target profit.
Most importantly
- Set your stop loss below a strong support level to reduce the possibility of it being triggered by non-essential price movements.
- Set your target profit at a strong resistance level.
With these steps, you manage risks effectively and increase your chances of achieving sustainable profits.