When to take profits as a beginner?

I follow resistance and support levels closely on most time-frames and if I think that the pairs I am currently trading have reached a significant resistance or support I close my positions and take my profit.

That’s the main key in forex trading to keep you survive. And so, patience is really necessary when you’re facing the outcome of your trading (both profit or losses).

Patience is the ultimate key to success when we are trading in this highly potential forex trading business. With the help of patience one can certainly profit in the forex market.

Rules for taking profit

  1. It’s really discretionary. At first you’ll decide to take profit when you feel like it.
  2. As time goes by and you learn more, you’ll most likely take profit when you see a reversal candle.
  3. More time passess, and you’ll put your TP stop at a strong level. You may be discretionary with this and decide to manually stop the trade once you see a reversal candle at the profit.

Newbie or not, it’s best to have a trading strategy when you do begin trading. Usually the strategy mandates when a position should be closed. If you know that you have a good strategy, then trust it, follow your plan and close your positions according to its conditions.

Each trader has to learn how to use a well balanced trading system and then only he would be able to make a good income from his trading…

Very much true, without balance in the trading system which includes the risk and money management as the main core ingredient, it is critical for traders to succeed.

If we are using such a trading system upon which we can rely then a time will come when our income will be good and we can say that our trading system is profitable :smiley:

What risk to reward ratio do you use? I look for 3:1. Do you think Im losing too many opportunities that way?

I take risk-reward ratio into account when I trade, but I don’t base my trades entirely off of it either.

Like you said “do you think I’m losing too many opportunities that way?” Technically, of course you are, yet this depends on your trading style(s).

I also take trade/lot size into account, how long I plan to hold the position, and the type of profits I plan on going for, and my certainty of the trade I plan on conducting.

For shorter term trades (within the same day trades) I look less at the risk reward ratio because the market doesn’t care what your risk-reward ratio is, place your stop loss and limit orders in places you decide based off your technical analysis. Then based off your technical analysis as well, you should be opening a position at the best possible place as well, which results in the best possible risk reward ratio with the smartest placements possible as well. When I trade for the short term I take smaller lot sizes because I can do these types of trades more frequently, I take very tight risk (so a close stop loss to my entry point, that is ideal due to my technical analysis), and depending on other technical analysis research I place limit orders to get rid of partial or my whole position. I highly recommend scaling out of a trade, meaning, get rid of part of your position and let the rest ride. This will allow you to put your stop at a better price so now due to some profit taking you just made yourself break even on the trade.

All in all, the shorter amount of time I plan on holding a trade, the smaller the lot size. Risk reward ratio is not thought about, but rather made based of technical analysis. Lot size may decrease as well if my certainty is not as ideal as I’d like it to be.

For longer term trades, I sometimes scale in and take larger stop loss areas. If I plan on holding a trade for a few days or longer, I often scale in so I can continuously take the best entry points starting with the tightest risk-reward ratio if it ends up going wrong. Then when I am in some profits I add to the position at good times and slowly trail my stop higher. Then after a little bit of that I scale out of my position to guarantee some gain in case the trade suddenly ends up going wrong. The only time I take longer term trades is when I am very certain on the position, therefore leading me to have a larger lot size, and potentially a larger stop loss size.

Take risk-reward ratio into account but don’t base your trades off of it alone. My short term trades often have like a 10:1 or better risk reward ratio because I just open the position at the best price possible to where the price shouldn’t end up hitting my stop loss. I would be dumb to just risk, a specific ratio for every single trade, not matter what the lot size was, how long I plan to hold the trade, my certainty of the trade, and the type of strategy I use on the specific trade.

Of course you should only take positions where you are very certain you will be correct, but sometimes for my shorter term trades, mostly scalps, I will sometimes make a trade even though I am somewhat certain about it because during those trades my risk reward ratio is crazy good like 10:1 or 20:1 etc.

Plus for short term trades, like scalps, there are hundreds, if not thousands of areas you can enter a position with like a 10:1 ratio or higher. Yet, that’s only because I like to scalp, I tend not to hold most of my trades for more than one hour.

agree with that :slight_smile:

Every one wants profit at very first day of his trading. As I see one should do trading on micro accounts for better experience and getting skill. Here you will not get enough profit . When you will do trading with proper investment in standard accounts then you will be able to get earning very soon.

this is kinda hard to explain, though many of the replies are good, lets just put it this way, there always should be a plan, and you have to stick to it religiously, usually what i do on my hotforex account i set small goals, as long as i end up getting a profit from any certain trade its good, i always eject any thought of “it could have been bigger” dont matter how big the profit is aslong as its a profit… in my opinion even BREAK EVEN is a good ending compared to a lose. so stay on the safe side and it should work fine…

When one takes their profits depends on the strategy they are using. My advice is, follow your strategy and trading plan and don’t deviate from it.

Yes, it takes time to understand your trading style! If you are comfortable with small TP and SL; that means you are perfect for scalping trading! Besides, if you are comfort with long SL and TP then you can try with swing trading style!

A lot of what I’m going to say has already been said, but you know what? I’m gonna say it again, because the truth deserves to be repeated.

First and always - Plan the trade, then trade the plan.

Your trading plan should be able to identify trading opportunities that offer you a Reward:Risk of AT LEAST 2:1. Meaning that if you can afford a risk of 20 pips, then your trading plan should be able to identify trades that offer a potential reward of at least 40 pips, and you should be passing on any trading opportunity that doesn’t offer you at least a 40 pip return.

If you can do that much, then you’re head and shoulders above half the retail FOREX schmucks out there.

Now lets get sneaky. Let’s try having a T1 and a T2.

So say you have a set up, and your plan is to buy 2 micros at X.xx30, with a profit target of X.xx70 and a stop loss of X.xx10. You buy, set your stop loss for two units at X.xx10, and a sell order for ONE unit at X.xx70. Set the sell order for the other unit at a higher, but still reasonably achievable, price. In our example we’ll set it at X.xx90

If the price drops to X.xx25, you get stopped out and the trade is done. Such is life, tomorrow is another day. If the market swings in your direction and your sell order gets triggered, cancel your original stop loss, and set a new stop loss at X.xx50.

Now you’ve got one unit sold at a tidy profit, all locked up. If your other unit gets stopped out then it STILL sells for a (small) profit, and you have a chance that you’ll sell that second unit at a HUGE profit.

This works IF you have the time and discipline to monitor your trade. Most of us have jobs and don’t have that kind of time. And many traders don’t have the emotional self possession to monitor a trade that closely without succumbing to the temptation to depart from the trading plan and “tinker” with it.

Did I say “many traders don’t?” I think I meant “MOST traders don’t.”

So that brings us back to “Plan the trade, then trade the plan.”

This, this, this. So many times, THIS.

Money management, self discipline, and emotional self possession are the bedrock foundation of successful trading. If you have that much, then you can make any trading plan work.

No offence, Duane, but that is 180 out from how I understand successful trading to be.

Fund your account from your risk capital, money that, if it is lost, will not affect your lifestyle.
Risk no more than 2% of your account on any one trade.
Have a trading plan that offers a reward:risk ratio of at least 2:1.
Understand that your trading plan may not offer you profitable trades every day. Market conditions may not be right, reward:risk may not be right. One of the worst things you can do is try to force fit the market to your trading plan.

And seriously, 100% return a month? I know nothing about you, Duane, but that’s the kind of thing a slimeball subscription service salesman might say.

“The challenge is then to determine which trading strategy can get you this consistently.”

No. There is no Holy Grail. The challenge is to determine what trading strategy fits the trader’s personality, trading style, and life style.

Don’t scalp if you don’t have six hours straight a day to state at your computer monitor. Don’t trade long term set-ups if your personality requires instant gratification.

I’m gonna say it again, 'cause it’s important - There is no Holy Grail except for sound money management, self discipline, and emotional self possession.

“Anyone who says anything else is selling something.”

Depends on the time frame you’re trading. That’s probably WAY to high for scalping, but for longer term swings that’s probably fine.