Forex Supply and Demand: Stop Loss and Take Profit Placement - ForeXposed

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Friday, March 17, 2017

Forex Supply and Demand: Stop Loss and Take Profit Placement

I give an example with an image for make it easier to understand about the placement of Stop Loss (SL) and Take Profit (TP) in the forex trading online.

This mental note is for full-timers and trader forex  which always monitoring the position and market movement, while for part-timers will encounter constraints and forced to use written Stop Loss or Take Profit to manage the risk.

I use EUR/GBP pair as an example only, as for Money Management we use Risk-Reward (RR) 1:3. (You can use RR at least 1:2);
Forex Supply and Demand: Stop Loss and Take Profit Placement

After seeing the condition of EUR/GBP in the Daily frame which is still in a trading range, if I decided to become a seller on the upper range then the next step is looking for entry position with the risks that can be tolerated. For that, we lower the frame to H4 and put simple Fibonacci as a tool assistant.


Seeing the price moving between 61.8% - 86.0%, if I decide to entry sell at 78.6% (blue tick) then, of course, we have to calculate the losses and the gains that might happen.

Say it, we use the Risk Reward Ratio 1:3 where the risk tolerated is 50 pips, the next step is to find the location to hide the Stop Loss.
Forex Supply and Demand: Stop Loss and Take Profit Placement

Noted, 50 pips of loss risk is located around the area of 118.0% up leg and lets us know enough to change the ‘combat position’.

Similarly, the placement of Take Profit (TP) which matching with the Risk-Reward Ratio that is 150 pips, we can measure the chart and Fibonacci extensions, such as this example shows at 118.0% down leg.
Forex Supply and Demand: Stop Loss and Take Profit Placement


While about using a time frame, setup on Daily or H4 is enough, even so, if we have expertise on this we can get down to the small frame.

For newbies, better not use frames that are smaller than M15. Despite the emotions that will really influence by bearish and bullish sentiments, also caused by the opponent, what we are dealing is not only bank traders but also fought against Algorithmic Trading from that banks super computer.