When trading on Forex, many traders do not use Take Profit, preferring to close orders manually or wait, while the market closes by itself by stopping out.

To ensure and to benefit even in situations of force, Take Profit exists.

forex trader

However, Take Profit is a fairly useful instrument, especially in the case of traders, for several reasons, not having the ability to control orders during all times. In this case Take Profit is very useful.

How to

Imagine the situation: traders expect price growth from the GBP / USD pair. He is right in his predictions, prices are rising and traders are waiting for some level of profit. But the situation suddenly happens routinely and something distracts the merchant: the internet connection is lost, the computer is damaged or there is a blackout, everything can happen. In such cases, the trader does not have the ability to control the process by himself. Price increases on several points, pushing away from resistance levels and going down.

One important situation is that orders with take profit will be closed even when the trading terminal is offline.

When a trader gets the ability to check open orders, he knows, that the price has moved in another direction and the order has closed with a loss. This situation can occur at any time.

To ensure and to benefit even in situations of force, Take Profit exists.

What is Take Profit?

Take profit is a financial instrument, which allows to improve profits. If a trader uses Take Profit, he always knows that the order will close automatically, as soon as the price reaches the desired value. For example, even if you live in front of a monitor and track price movements carefully, you don’t always have the opportunity to close orders. Such a situation might occur on the market during a news release.

One important situation is that orders with take profit will be closed even when the trading terminal is offline.

Take Profit is placed in the following way. In the MT4 terminal, on the instrument panel there is a “New Order” tab. In the window that appears you must choose the take profit value. Placements are based on trader estimates and, as soon as the indicated price is reached, the order closes with profit.

Take profit set

If for some reason the merchant forgets to place Take Profit or wants to change his selection, in the bottom panel of MT4 you have to double-click on the row with the order opened.

take profit

 Modify Take profit

take profit

Don’t forget about one feature. Depending on the type of trading operation: buy or sell, the mechanism for taking Take Profit is different.
In the case of buy orders, Take Profit is placed higher than the price.
In the case of lower sell orders.
There is no way that you will misplace it. In the case of a misplaced price, MetaTrader will show an error.

Determination of Take Profit size

There are many ways for the size of take profit to be determined. Mostly, you must pay attention to market conditions, the current situation on it and your trading strategy.

The three most commonly used methods:

Local maximum and minimum, where price reversals have occurred. This method is considered the simplest and has a good reputation. When increasing, prices rarely exceed the maximum, usually price reversals occur and reverse movements begin. So, in the case of a buy order, you have to place Take Profit near the maximum. In the case of sell orders, you need to pay attention to the minimum and to place Take Profit at the limit. Using this method, it makes sense to increase the Take Profit size in 5-10 points depending on the situation.

Fibonacci Pivot Point.

In this case the guide is the level of setback from the previous movement, which acts as a resistance line and the original line support.

Depends on the expected level of loss. The profit is always higher than the probability of a loss of 1.5 or better in 2 or 3 times. According to these calculations, Take Profit must be greater than the value of Stop Loss.

Apart from those mentioned above, there are other ways. There are a large number of traders and each brings something new, sometimes even very useful.

Trailing stop.

If the price moves in the required direction, Stop Loss is thereafter. This is useful for those who don’t have the ability to track changes in quotes. After opening an order, the trader can place a trailing stop. In this case, he must show, at what distance the price moves, the trader can start doing something else and not stay near the monitor to track the trading process. After some time, the order will close automatically. The disadvantage is that fixed take profit often brings greater profits.

Fibonacci time zone.

Usually used by long-term prediction fans, who prefer to place a minimum number of orders and keep them open for a long time.
Graph numbers, they can also be called models or patterns. Distinguish reversal numbers (head and shoulders, double top, double bottom) and hold (triangle, flag, wedge up).
In each particular case the take profit placement position is explicit, which is determined and only depends on the size of the number.

We want to draw special attention to one important fact. When prices almost reach Take Profit, it’s better not to change that level in order to get higher profits. When placing Take Profit, most traders use certain factors, which indicate precisely at this level.

If you use Take Profit constantly, it disciplines you. It’s difficult to check strategies, if traders always take risks. The size of Take Profit must be analyzed and placed and under no circumstances should it be changed after the order is opened, if changed, the trader risks with his own funds.

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