Hi all traders, I am a newbie in Forex for only couple months. Indicator I use to monitor the trend and entry point for buy/sell are MA, Stoch, MACD and RSI.
These indicators give me a good entry-point but it is hard for me to find a out-point. And it is always trouble me because always give me a winning signal but lose end of the point.
My question is "Is there any indicator can help us to calculate the possibility SL & TP base on the above indicator?"
Hopefully any experience or success trader can help me to answer this.
Thanks for help.
I’m assuming that you have a firm set of rules for your entry points. If you don’t, you need one. In regards to the TP & SL nothing worked better for me than a good old statistical analysis of the system. Here’s the method I used:
Draw a chart with the y-axis being the total potential profit (the highest pip gain one trade could see) and the x-axis being the maximum stop loss required (how much you had to risk for that individual trade). Now comes the fun part!! Go back far enough in your charting program to get 50-100 trades. (the more the better obviously). Then move forward in your program, trading the same times you would normally trade. For each trade you realistically would have traded write down the most you could have possibly made if you had closed out the trade at the very top of the gain and the most you would have had to risk (never 0 because of spread) to be successful in the trade. Now chart these points.
This information can be gained through an excel spreadsheet, but I like charting :D. Anyway you can draw a vertical line where you want your stop loss to be and a horizontal line where you want your take profit to be. All the points above the TP line and to the left of the SL line are valid trades and would give you whatever you set your take profit at. Everything else you can count as a loss in the amount of wherever your stop loss line is.
Once you move the lines around a little bit you can find the point at which most data points are in the “profit zone.” Always be careful to not have less than a 1:1 risk reward ratio though.
This method worked really well for me. Let me know if you have any questions or if I wasn’t clear.
GL!
Sorry sir. I cannot get the meaning you explain above or may be you can help me to explain in a chart as sample? I am person who better learning with the chart+description. I cannot get the imagination if only with description. Sorry for disturb. Thanks for help.
Note:
I am using MT4 as platform. My indicator setting as below:
MA: SMA5, SMA10, EMA20
RSI: 14
MACD default setting
Stoch: 5, 3, 3
Parabolic SAR default setting
BUY Entry:
- When SMA5 cross above SMA10.
- RSI between 0-50.
- MACD show up trend.
- Stoch between 0-50
Grandmaster Pip says you need just to experiment with data from your own previous trades and then you will definitely see what settings will work the best for you
Thanks Din! Thats pretty much what I’m saying. Chaihuat, I appologize but I had a computer failure a couple weeks ago and lost all my old examples. But backtesting, or going into history and trying out different stop losses and take profits is the best way to find your answer.
OK. Thanks for both. Look like only the way to do some tests to find out what SL & TP setting for my system.
By the way, will you using the “trailing stop” method? If yes, what value you normally set? 10pips? 20pips?