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Links to external services, especially if they are selling a product such as signals services or binary options will be excised with haste. Want to post a trade? Most often I see 1: This is considered a good trade position for beginners, as anything less, or with a negative risk ratio wouldn't make sense.

After all, in the case of the reverse trade position, why should you risk losing pips when you only stand to possibly gain 50? Then yesterday I came across this post on forexOP that not only says the above method of risk-management is false, but even argues the exact opposite is better with seemingly sound logic.

Before entering a trade, you should consider the time length you expect to have the trade open and this should take into account the average movement the price makes on a given time frame.

In this case, if you hope to make pips in profit you are most likely looking at minutes of waiting before the TP is realized. But remember that the average pip movement is direction neutral. So over the course of the expected minutes it can, at best, go constantly in a profitable direction for you.

It can also go against you. If your SL is only 50 pips, probability is much higher that the SL will get hit before your TP because less movement is required to get there. Averaged Probability-wise, a SL hit is possible from the minute mark, but TP has to wait minutes to realize. He then uses maximal curves which I admittedly don't fully understand to illustrate the likeliness of price movement of X-pips over Y-amount of time.

Put simply, he is saying that a wider SL and narrower TP has a higher chance of the trade resulting in profit. I'd like to hear what people with a bit more experience than myself about 6 months demo have to say about this idea. Take trading a strong bull trend for example. If you were to buy at any point you have a good probability of it continuing, however your stop would have to be under the start of the trend in order for your idea to be invalidated That would be a wide stop compared to relatively smaller profit.

On the other hand, if you were trying to call tops in a strong bull trend, most of your reversal traders will have failed, but you could have entered them with a very tight stop relative to a huge reward.

Traders are always positioned on both sides of the market and will only be taking trades where the risk reward and probability make sense. Here's a link to Al Brooks blog post on this.

If you look at the chart at the bottom, you can see where he points out the high probability sell but small reward stop above at '1'and then the low probability buy with a very tight stop at '3' with a big reward relative to risk.

The ForexOP post I linked goes into detail about the probabilities involved with flat markets vs trend continuance and trend reversals in the section titled "Step 3: My best outcome happens if the short-term trend reverses, that is if the market rises and makes my buy profitable. When I set the trade up what I am looking for is the chance of the take profit being reached, to be at least 1. It's a good article and I like that kind of strategy, entirely maths based.

I see now he uses ATR average true range to create the probability scenarios - I once tested the daily range over days across 5 or 6 different FX instruments to see how many days exceeded the average range and came up with this: Quite interesting stats and you can mark those areas then on your chart and know what the probability of price making it or not to those areas are.

The problem with this in my opinion though, is it can only really tell you where the market is likely not to go, rather than will go. However that does not mean the market will turn around because of this. The main thing to take out of this, is that you can use this to put your stop where it is unlikely to get hit.

I think many fall into the trap of high risk reward trades and therefore look for the tightest possible stop. The main issue of the article to me is understanding the entries and direction, although my understanding is that he is looking at all the probabilities on both sides at any given point in time and taking the trades which make sense in regards to his expectancy formula. Here's a cool little table showing expectancy with probability vs risk: Personally what I don't like about the ForexOP trading is that he disregards price action OK he looks at if the market is flat or trending - to me this is key.

Plus I look at which side has the greater strength, therefore better odds in continuation. Then I will look to my probabilities and takes risk: If the odds on a trade are high the risk can be bigger relative to reward, and low probability trades such as reversals in a trend need to have tighter risk to greater reward in order for the expectancy to be worthwhile. This isn't true, you just trade smaller size to accommodate your account size.

If your broker doesn't let you trade smaller, find one that will. These are greatly informative responses and I'm very thankful for them! I'm on mobile now so I can only respond to what jumped out at my most here.

This is where you lose me. Setting SL behind SR or trend reversal candles is sensible because if price goes back into that territory your trade is invalidated. Or are you just saying "tight SL big TP" mentality is a trap because SL get hit more often?

Are you saying SL in obvious locations are "targeted" by the market to provide liquidity? This might sound daft but the wording is confusing. Traps are a funny one, and you will probably get many people who agree or disagree with 'are stops targeted'. Yes indeed a stop underneath support makes sense because if we trade under it, your idea is proven wrong.

Pin bar reversal candles are a favourite also because for the same reason, if we trade above it, the idea is proven wrong because the reversal failed and also you get tight risk to high reward on the trade if it plays out. So yeah, there is nothing wrong with putting stops there and trading like that. Personally I have quite a bit of discretion in my trades, in short I like to have wide stops but react to price, usually only tightening them once we've had a pullback or a reversal and then seen price move away.

Here's an intraday 5min chart for example: So let's say you were short with a swing trade from this morning, double top with a stop above the high of the day. As time goes on, and we continue to make newer lows for the day, the odds increase the hod will hold. Anyway, so now we have a fairly secure short in play, then we get a pullback, those 4 consecutive strong bull bars. Followed by an attempt lower - which you could then tighten your stop to saying "this is the end of the pullback" and get a good risk: Then again to the right, this got hit and formed another reversal.

That's why I'm wary of such tight stops before we've moved away. And then to the far right we have that yellow box where we raid the stops one last time before the real move starts. On a side note, if you know your market then this is kind of typical. So you can therefore also argue for wider stops during the 'sideways drift' period which usually happens around Now a fundamental reason for why?

Well in my mind and what makes sense also you see this time and time again when you begin to notice them is that if you have size and want to short this market. Selling at market isn't going to do you favours because you will be selling, market goes down, selling, market goes down, and getting a worse price. However, if you enter where the liquidity is, for example that yellow box where the short stops are i. This is where the institutional size will be.

Again, very thankful for these detailed replies. They may be a bit over my head. I'll dig through and ask questons. How do you determine which is a real downturn?

It seems here you're trying to say that having a SL above the HOD is better in this case because it won't get tripped by these smaller moves. Did you tighten the stop down after the yellow box move?

You talk about going short at market vs making sell stop orders at SR levels where you suspect buy orders will be. Like the yellow box. I may be interpreting this wrong. So are you saying that you should go short at the tops of faking reversals? It is data I update on a daily basis for the DAX intraday market between the cash open and close, so Every day will only have one LOD and one HOD.

Some days will print the LOD first and then HOD second, others the HOD before the LOD. A little more data in this one: Above shows the odds for each 5minute interval and to the right is 30min intervals. Going back to yesterday: Now instead if we had broke it early on, say australian gold stock market traded higher and took the highs out around 10am, the whole thing would be switched round and instead of the HOD coming before the LOD, we would have the LOD printed and then a new HOD made.

The odds would then be significant that the LOD would hold. It may be a bit confusing, the reason I bought it up was because I thought it was interesting and followed the theme of 'stops in unlikely to get hit places'. But the next bar will tell us that, if we break under the And if the next bar goes above As time goes on these odds increase. To the right is the 30min intervals. Look how high the opening 30mins gt247 forex trading, So how do you use this?

It's basically all about getting an early position with a safer stop. In short, the earlier you get in, the better your risk: But again, if you are buying those highs productive strategy in binary options 11am with a stop under the LOD, you are likely to have pork belly futures trader huge risk, to an unknown reward, and it is entirely possible we close the day in the middle which puts you offside although not a full loss.

So again, they are just stats to help determine an early swing trade. Ok this time around I didn't know what meant by "printed", but by the 3rd time I read through, Alibaba stock options yahoo think I got it.

In the chart you link, the first candle is the highest and the market moves down from there. The 2nd candle being lower than the 1st makes the 1st candle high become "suspected" or "printed" as being the HOD.

Stock market highest climbers time goes on, and as it gets tested repeatedly, but not broken, this probability increases. The problem is we don't usually know which will come first! Whichever does come first will be blue, but as the day goes on, these can switch round. So if the low comes before the high, the low is blue, if we then make a new low after that, the high becomes the blue.

Back to this chart: Yeah again I realise I'm missing a lot of information - I trade it from the open and ignore the rest of the bars to the left, so to the left of that dotted vertical line means nothing to me. The first bar is the HOD we dip down and retest it on the My entries are always stop entries or market if its quick above or below bars that way I trade with the binary options as a real earnings of the market, instead of looking barrier vs binary option fades so I sold on a break under the double top bar I also had a bit of a short bias from the higher rs wiki money making crafting frames, and so then it's down to look for price action for my entries, which was the double top - and as you can see there's a bit of a wick on top of the candle showing there were sellers here.

Earnest money defined was a nice low risk entry but a great risk: Just for transparency here is today: I shorted under the second bar looking for the same kind of play as yesterday, initial stop was above that bar betting on it being an early HOD, though closed the trade on the close of the fourth bar as it was evident we weren't going down.

Again a low risk entry looking for a big swing for the day. The truth is you can't until it's happened. But that is where reading price comes in very important - for a bear move, consecutive bars shows strength, closes on their lows, wicks above that show sellers etc.

Also knowing the market, I wasn't expecting much from the 11am through to the US open at 2. But anyway, for me, stops only really get tightened after a move becomes evident. I actually left my computer which kept me from tightening my stop.

But as I said, the market usually just drifts during this time, and experience has told me to buy wood gun stocks online away. Important to note here again, based on stats I keep, I know this market really quite well. On a side note, the recent increased volatility and huge swings in equities meant that my stats 'went to shit' during that period and I was essentially forex trading hours oanda as to what may happen, also we had much bigger than normal candlesticks and so I just stayed out of the whole thing, barely traded because my edge wasn't there anymore.

It was difficult to sit day after day and do nothing and frustrating to see those 'big moves' go without me. What I meant here was in regards to institutional size trading. Where if they wanted to get some big size short, and just hit market at big size, they would be moving price lower and giving them self a worse off price the same would apply when they wanted to buy back the shorts to take profit - their size would work against them.

What are the rules for placing stop and limit orders in forex?

What they need is a liquidity pool, i. So that yellow box s l t p forex a good example of that, lots of short stops buy orders sitting there. So I didn't necessarily mean that's how you should trade, retail traders certainly don't need to worry about moving price as they trade but just to be aware of key areas like that.

Personally I'd rather wait and see what happens and then act after. As with that GBPUSD trade, I waited and watched the 'fake out' and then bought the pullback after with a price action entry. If options stock simulator was no pullback I would have just missed the trade.

Take-Profit Order (T/P)

This is a trade I took in the GBPUSD a few weeks ago with my theory being trapped traders - same thinking as what I put in my last message. We're in a uptrend high, low, higher high, higher low etc. Stops are building on either side and get riper and riper very similar to the EURCHF floor.

The trade I got binary option support and resistance in was waiting for the fake out, the stop run or whatever you want to call it which on the hourly: At that point though it's still wait and see as to if the market breaks lower or holds, but for sure any longs with stops under that support have been taken out.

My entry was then the second yellow circle where we had an inside bar set up but my stop was under the first fake out initially, until we got the move higher where I tightened it to under the second yellow circle.

Targets where then very clearly looking for a stop run to the upside, like I said, it was just getting ripe for one alpari how to win in binary options broker reviews. I hope that clears it up a little bit what I meant. The way I trade them is being a bit more patient and waiting for the initial move to come, and then reacting afterwards.

Quite an easy one to spot this is when you draw in both sides of a range and see how price reacts when it does break out. Here is one on the DAX hourly, a failure to break the top side of the range: Also, sorry if this went completely off topic as to what you were asking for - I thought two trade examples may clear it up somewhat, or at least give an idea of what I meant.

At the least hope it was a somewhat interesting take. I think this is talking about the near vertical rise after the 2nd yellow circle. My question here is why was the upwards "stop run" after the 1st yellow circle so much smaller than the 2nd? If I were watching that hourly chart, I would've expected the 2nd circle area to continue the downtrend shown in the rest of the hourly chart.

I assume you went on long only after it bounced back upwards? Why was the 1st circle "wait and see" and the 2nd one was the "real". What I see in that image is the top side range being clearly broken several candles close above itbut then it came back down inside. My way of seeing this is the top side line is drawn wrong. Why do you say this is a failed break out?

Again, sorry for all of these probably beginner questions. I sense there is a lot of valuable information in your replies, but I don't understand how to gain money in prison architect lingo enough to decode most of it.

By riper I meant 'growing stops' for example: The more it's tested like that, the 'juicier' it becomes, and the same happens to the downside.

In the same way flag breaks are nice, just stop runs: And again at 3. It gets 'riper' or 'juicier' and you get the run right through. Yeah, I watched the first circle, the stop run and then bought the second, the pullback retest to that area. If there was no pullback I would have missed the trade.

And I had no idea how long it would take to move up, or if it would at all, but usually once one side gets taken out and fails, we will be moving to the other. There are no right or wrongs, there's no perfect way to draw a line. But if you look to the left, there is solid resistance there, and that is where bulls are taking profits and bears are selling, hence price turns there.

Then that yellow box was a breakout attempt of that resistance, the fact we're trading back below it shows that we failed to succeed in breaking out. I'm trying to understand the rationale behind why these trades are considered low or high risk.

There is no explanation of that graph in the article. I'm not a member, so the full article isn't visible. This is a good SL for going short at '2' because it indicates a reversal and invalidates your position. So selling at '2' is high probability because you just came off a huge downtrend that is likely to continue?. How it this determined?

Is this to say "betting on an uptrend here is unlikely here, but if it happens it will go up a lot? Yeah sorry it's not the greatest of examples, and not explained at all. He trades entirely price action based - the main reason for the article was to point out the traders equation which I now notice your guy in the ForexOP also talks about. As I said, Al Brooks trades price action, so won't take 'static' trades but will adjust them appropriately.

Also, point '1' would be the protective stop, but it's very very unlikely he would let it get hit, after the trade took off he would be looking to tighten the stop immediately, or if a reversal did come into play, he would be closing the shorts. The key point I suppose is such a wide stop will let you watch and trade accordingly without getting stopped out if it was too tight The second long trade, well the bears have been in control all day, lower lows and lower highs, and we're down on the day.

However there are clearly buyers here, at prior support and '3' shows buyers came in as we closed that bar bullish. So it's a reasonable long, but you are betting against the main force of the day the bears therefore low probability, but high reward if the bulls win. As I said, it's all price action based and more active 'scalp' trading as opposed to swing trading which is your ForexOP guy. Both rely on an understanding of the market but scalping requires you to read price action whereas swing trading is more of a 'set and forget' based on stats kind of trading.

Keep It Simple, Stupid! If you expect a 15 pip neutral move, that might tell you that it's considered low volatility for your pip TP move. You can divulge in the mathematical models all you want, but if you look at your screen long enough, you usually know when to and not trade.

For me, it would be in the afternoons New York time. If it's around 2pm to 6 pm, I don't expect much movement. Of course you have to consider the duration of your trade along with TP, SL, volume, volatility, order size, etc.

That's what makes trading difficult and practice necessary. My advice is more chart time and less of this theoretical stuff.

Good to know, but it's not going to help you unless you learn what tools or methods you are comfortable with using. Since you said you don't fully understand the maximal yield curves, this calculation should not be one you use in your trading. More difficult to realize successful trades.

You lose more often low win ratio but when you do win it gives you a big profit that covers your losses. This seems newbie safe. Can afford to make many mistakes. Easier to realize profitable trades. More difficult to get stopped out. Each winning trade is a smaller profit and TP losses are big.

Maybe geared for traders who know more what they're doing and can offset the higher risk with better trade setups? ForexOP also seems to support Grid Trading and Martingale strategies, which I've seen lambasted on other sites. Unfortunately I have a very sensitive bullshit meter when it comes to forex advice. It's really hard to come across anything that I don't find suspicious. Those ratios are guidelines imo and fixed TP are bad imohere's why: You start with a 20pip SL, and usually move it to break-even after 50pips of positive movement happens.

This is exactly what I have been doing lately. I also move it with the trend by 50pips for each additional 50 pips of profitable movement. What timeframes do you use that make pip SLs enough not to get triggered by fakeouts? In my experience hourly charts are the limit for this. You don't set a TP, but you watch the price movement on the chosen timeframe and get out when the trend starts to change against you.

You use 15 and EMAs because they are meaningful on multiple time frames. These are only used for confirmation, nor to spot exact trade entries. If your pip SL gets hit, you allow up to 3 re-entries trend and signals providing per pair per day.

The 50pip BE setting isn't fixed, it's just an average. Basically, you want to set it to BE as soon as possible whenever you consider it unlikely that price will get there again unless you're totally wrong.

I base my overall trend direction on H1-D1 but mostly time exact entries on M I never trade against my higher time frame bias on M15 though, and that's really important. I trade high-volatility things commodity CFDs so H1 wouldn't be optimal as entry TF if you want to keep initial SL small.

I don't watch trades at all because I have alerts set on Tradingview.

what is SL and TP? | easyforexpk

They'll send me an email if certain conditions changing DMI, break through EMA, etc. And yup, I limit myself to 3 losers per day. Reason is, generally if I lose 3 times markets are super choppy and that's stressing me out I don't like stress and prefer to keep it easy.

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Fairly candid look into a Canadian trading firm, in minute episodes. This is an archived post. You won't be able to vote or comment. Paraphrased, it goes thusly: This results in a higher chance of trade failure SL hit as time passes. He has tables and formulas that explain this. In particular after all the math he states: My trade setup is then: I'm just trying to wrap my head around how that's possible.

Why are you saying this is a trap? I'll do another trade example in a new reply. What do you mean "first HODLOD" as opposed to "second HODLOD"? What is this chart meant to show? Is this historical data from pat days, or does it get updated as the day progresses? You mention having a "short a from the morning, double tops with a stop above the HOD". Is this what you're talking about? The rest of the questions I should be able to answer much more briefly: If orange is HOD, blue is LOD, and vice versa.

Back to what you said: Targets [were] then very clearly looking for a stop run to the upside I think this is talking about the near vertical rise after the 2nd yellow circle.

Why was the 1st circle "wait and see" and the 2nd one was the "real" the DAX hourly, a failure to break the top side of the range What I see in that image is the top side range being clearly broken several candles close above itbut then it came back down inside.

My way of seeing this is the top side line is drawn wrong There are no right or wrongs, there's no perfect way to draw a line. Very easy to digest! I would like to read more of your posts. Find and time entries on min, but exits are based on daily movement. I don't give a fuck about the the time it takes to hit 50 ticks if im in at the right price.

Chances are you're wrong at 50 lol. Posts are automatically archived after 6 months.