How to plan the entry levels and targets for stop-loss levels when trading currencies online
Due to the popularity of Forex trading in Singapore there are hundreds of newbie traders who wish to trade Forex in Singapore. In this article we will show all newbie Singapore Forex traders how to manage their trades. Whenever you place a trade, you have to write down three numbers: the price of entry, the goal and the level of the protective stop-loss. Let’s discuss each of these numbers.
The entry point to the market. Plan your entry to the market beforehand. You should not rush every time and try to start a trade when the price graph on the screen looks tempting. When you place a trading position we recommend you to avoid the market orders or instant orders. It is more safe to use the pending orders. Limit orders avoid slippage, which in many cases is the main reason for losses and poor trading.
A target. Before you open a trade, you need to decide where you want to capture the profits. Beginner traders often open positions without planning their leave, arguing that they will manage the trading position when it is open. They hope that the trend will continue to the maximum values, but in practice they probably will close the trade at the wrong time when the trend starts to move to the opposite direction. The novice traders must identify the levels of targets in advance, because they simply don’t have enough skills to make a decision to close a trading position if the market’s situation suddenly change.
Stop-Loss. When people ask us what our expectation for profit we sometimes say: 100%, because we expect that each transaction will be successful, otherwise we wouldn’t open a position. Unfortunately not all our orders bring us profit. But there is a difference between the big and small losses. In order to minimize your losses we recommend you to use the protective stop-loss order. It helps you to leave the market if it turns the wrong way and protect you from the big losses.
Profit/Risk. It is calculated as the distance from our entry point to the goal divided by the distance from the entry point to the stop-loss level. For us this ratio should be at least 2:1, otherwise there is no reason to open a position. 3:1 share is even better and if you are patient and know to watch the market very carefully, you will be able to catch 4:1 and even 5:1. The higher the share, the more potential you have to close the position with a profit.
Finally, if you wish to be a successful trader you have to teach yourself to avoid wishful thinking. We hope that the description of the three most important numbers for each trade will help you move to a higher level of professionalism.
Article Source: Messaggiamo.Com
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