Hi,
I’m new to Forex and I just closed my first trade last night. I made money on it (this is all on a demo account) but I’m fairly sure it was luck so I have a few questions.
So I decided to trade EURUSD and I was trading on the 15M time frame, I saw a bit of a trend happening so I decided to do a BUY order at 1.35500.
This is what the chart looked like before I made the trade.
My red dot is where I actually made the trade and the red line is where I put a stop loss and I set it there just below the last support line I could see and was at the bottom of the bollinger band. It was 1.34731 and was about 74 pips below the current price.
As I only wanted to risk 1% of my $20000 which is $200, using the BabyPips position calculator, I put in a volume of 0.22.
Now this is the point where I’m a little confused cause I’m not sure where I’m supposed to set my Take Profit. I can’t use support and resistence cause EURUSD seems to be going up to a level it hasn’t been for months.
So initially my thought was I would get out if my moving averages lines (of periods 14 and 28) overlaps each other. The problem was I couldn’t figure out how to get MT4 to automatically close out a trade under this condition. So instead, I put a take profit at about 120 pips to 1.36700 just in case it raised to that point. 120 pips was largely just a random number I picked that would give me a decent risk-reward ratio.
Anyway, so as it turned out EURUSD was able to rise and it ended up hitting my Take Profit level which is good but I have no idea how I would repeat this as obviously randomly picking 120 pips is not a good strategy.
Looking at the chart afterwards, the vertical line is where I initially bought and the dot is where I sold
I can see that if I had used my initial take profit policy of where the moving averages lines converge, it would’ve probably exited me out at about 1.3565 which would give me a 15 pips profit. This is obviously not acceptable when I’m risking 74 pips for that.
So sorry for the long post but my question is how do I pick a take profit level? Should I just pick a price to exit like I did here? If so, what kind of sign should I be looking for when the trend may end? Should I be using signals like the moving averages overlapping thing? If so, how would I be able to calculate my risk-reward ratio beforehand?
By the way, this is my first trade and I’m keen to learn so if any of the logic I used above doesn’t seem sound, please let me know!
Good luck