Stop Loss & Take Profit Masterclass
One of the most important things that you as a newbie need to know about Forex trading is the stop loss and take profit dynamic. Both stop loss and take profit orders are integral to all types of day trading. If you expect to be a profitable day trader, whether Forex or otherwise, you need to be familiar with stop loss and take profit. This is what we are here to learn about today.
What is Stop Loss
A stop loss, also simply known as SL, is a certain price limit put on a trade by a trader. When this price limit is reached, the trade will automatically close.
SL is an integral part of the stop loss and take profit dynamic. The point of stop loss is to set it at a certain level below the value of the trade at the entered price.
Therefore, if the value of the trade goes down by a certain amount, once it reaches the price set in your stop loss order, the trade will automatically close. This allows you to save some money and recoup some losses in the event that a trade goes south.
What is Take Profit?
The other half of the stop loss and take profit dynamic is take profit, or simply known as TP. This is just as important to know about as stop loss.
A take profit order is a certain price limit put on a trade by a trader. When this price limit is reached, the trade will automatically close. The point of take profit is to set the price at a certain level above the opening price.
Therefore, if your trade increases in value, once it reaches the value where you take profit order was set, the trade will close automatically. It’s just like stop loss, but just in the other direction.
The point here is to allow your trades to close automatically when a certain profit point is reached. It’s a good thing to be familiar with if you plan on making substantial profits in any kind of trading, especially in Forex.
Benefits of Stop Loss
The main point of a stop loss order is to save you money in the event that a trade goes south. Even with lots of knowledge and preparation, things can and do go wrong. Sometimes trades are losers. It’s as simple as that.
The reason why stop loss orders are so important is because they can end up saving you a whole lot of money. Say you enter a trade with a value of $100, and your stop loss is set at $80. If that trade decreases in value down from $100 to $80, the SL will automatically force the trade to close.
Therefore, instead of losing the full $100 investment, you will only lose $20, and manage to salvage the other $80. As you can see, this is extremely important and it can indeed come in very handy, especially for newbie traders who might be placing some bad trades.
Benefits of Take Profit
Yes, the stop loss and take profit dynamic is quite interesting indeed. Just like SL, TP also comes with some big time benefits for all traders. Here, the whole point of a take profit order is to ensure that you end up with profits in your pockets.
The fact of the matter is that trades can fluctuate, and although they might be going up in value one minute, things can quickly turn around and go the other way.
With a take profit order, say that the trade was entered at $100. You can then set the TP to $120. This means that once the value of the trade reaches $120, the trade will automatically close, thus allowing you to bank the $20 in profits.
The benefit here is that this helps to ensure that you maximize your profits. In the event that a trade rises in value, and then appears to be turning around to lose value, a take profit order will prevent you from suffering from the downturn.
Andy’s Stop Loss & Take Profit Masterclass
Ok, so now that we have talked about what stop loss and take profit levels are, and why they are so beneficial, let’s quickly take a look at Andy’s stop loss and take profit masterclass. For those of you who don’t know, Andrew’s Trading Channel on YouTube is home to hundreds and hundreds of useful trading tutorials.
Andrew is also the owner and leader of the Income Mentor Box Day Trading Academy, one of the most highly respected trading schools in the world. This guy knows what he is talking about, as can be seen in his recent upload, the stop loss and take profit masterclass.
Here, Andy talks about what each of these things are, their various benefits, and most important of all, how to calculate stop loss and take profit levels for the best results. If you want to become intimately familiar and knowledgeable on this topic, we would definitely recommend watching the whole video from front to back.
Income Mentor Box & The Stop Loss and Take Profit Tutorial
Another thing that we do want to touch on has to do with learning this stop loss and take profit dynamic from the best in the business. Yes, Andrew’s Trading Channel on YouTube does have a fantastic tutorial on this subject.
However, for a fully comprehensive lesson on the subject, with all aspects and facets covered in great detail, joining the Income Mentor Box Day Trading Academy is highly recommended. This day trading academy features over 55 different full length lessons on a multitude of trading aspects.
Simply put, this multi-part course will not only teach you the ins and outs of stop loss and take profit, but about any and all other aspects of day trading too!
Stop Loss & Take Profit – Final Thoughts
The bottom line is that learning about stop loss and take profit will bring you one step closer to being a successful and profitable day trader.