Calibrate its profit target according to its risk in forex trading :


Setting up a takeprofit is strongly advised in forex trading, this allows to target a gain objective on each transaction realized in the markets. Experienced and professional traders very often come out of position on the basis of a takeprofit, this is usually calibrated according to the amount of risk taken on the trade (stoploss). For example, a trader who risks $ 100 on his trade, will generally not aim less than this amount as a target gain, he will aim at a minimum of $ 100 or $ 200, so his risk reward ratio will be 1: 1 or 1 : 2. Many long-term traders generate risk reward ratios greater than 3, risking $ 100 on a stoploss so they will have a takeprofit of $ 300.

This approach is particularly interesting because even losing one or two consecutive traders, with an average risk reward ratio of 1: 3 will still benefit the next trade or breakeven, so a good risk reward ratio Does not require a high success rate. The better the risk reward ratio of a trader is, the more he will be able to overcome the losing speculative trades and will increase his chances of long-term success.

Although it is important to calibrate the objective of gain according to risk, it is a logical behavior that makes it possible to improve the results of the traders but also to facilitate their activity. The trader knows in advance what he will win in case of profitable operation, he no longer tries to forge and wants to win a fixed sum of money each day, he does not aim for specific profits on the basis of Of his emotions and he is expelled smoothly from the market once the goal is achieved.

Having a smart approach to setting up your takeprofit in a logical way allows you not to fall into the trap of unrealistic profit goals and to stand up to the psychological problems involved in trading. Defining a target price level to achieve is much more reasonable than wanting to earn 100 € or 200 € per operation or by the end of the day. Note that the takeprofit and the stoploss are part of the basic settings of a trade and money management and are features obviously available on all the trading platforms of the forex brokers.
 
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