Take Profit

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Take Profit

Usually you set your take-profit order to the profit target point in order to fix profit automatically when market reaches it. Alternatively, you can also use a trailing take-profit order if you want to maximize your profit.

But both options have drawbacks. The first one limits your profit if market moves higher than you’ve predicted. The second option also limits your profit if volatility of a trend is very high. What usually happens is… When activated, your trailing take-profit order can be set too close to the current price, and be executed when a small temporary pull-back occurs. Then, market edges higher and higher, and you loose a significant chunk of your predicted profit.

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). This approach has several advantages. First of all, if a significant trent starts the day you open your position, you have a good chance your large take profit order will be executed.

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