Stop Loss above entry price, Take Profit below market?

Hi All,

I hope this finds you all well.

An example, let’s say I went BUY on USDCAD at 1.26663 and few minutes later I am up by 200pips (1.26863) and my current profit is $200.

I do not want to close yet, because I strongly believe the price will go higher.

However life happens and sometimes we get distracted by others…spouse, kids, pets etc. those few moments of distraction can cost you a lot, so my question is…

Is it possible to place a S/L above the entry price OR to set a T/P below the current market price to protect some part of the profit.

I look forward to your comments.

Thank you and kind regards,

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Hi, yes you can do this. Regards Greg

You can do this Charles and its a good technique but I think you’re getting a bit mixed up over the names. If you have a long position as here, any exit order above the current market price is a TP, any exit order below current market price is a SL.

Having a TP is optional but as soon as you enter a position, always set a SL. In fact, once you’ve worked out where your SL will be, then you can correctly adjust the size of your trade before you place it so that if the SL is hit, you will not lose half your money.

Yea it’s called a trailing stop. Look it up.

that’s 20 pips, not 200 pips.

yes, it is - and it’s often a good thing to do

you can always adjust your stop-loss after the price has moved, and for no extra charge

but don’t confuse that with a “trailing stop” mentioned just above

a trailing stop is one way of doing that (often far from the best way to do it!) which is automated and therefore not related to the volatility, support and resistance, and so on

counterparty market makers (who win when their customers lose and vice versa) love their traders to use trailing stops and always make them available and often suggest them in “information” on their sites - it’s usually possible to do better

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Many thanks! Much appreciated.

The corrective responses to your query indicates you need to firm up on your learning. I’ll recap:

  1. A price movement from 1.26663 to 1.26863 is 200 points, 20 pips. Ten points =1 pip.

  2. A S/L on a buying trade is always set below the entry price. Rationale, you have speculated the price would rise. If it falls you would be making a loss. In order not to lose more capital than you want, a S/L price is set. If the trade does fall, the trade will be stopped out at that S/L price.

  3. A take profit (T/P) price ‘stop’ is placed above the entry price for a buying trade. If the trade price rises up to the T/P level, the trade will be stopped out and you would make a profit.

  4. On selling trades, it’s the opposite.

What I do is to set a 200 point S/L before I enter the trade, and when entered I manually move the S/L line to my chosen trade risk, usually 0.8% of my capital. On profitable trades I continue to move the S/L until I’ve reached breakeven before setting a T/P entry that would be minimally a 1:1.5 risk reward. If the trade continues to make profit, I also would use a trailing T/P set at 50 points.

Of course, I have the time and space to monitor movement for the first hour, and by that time, I have a pretty good idea of the eventual outcome. Losing trades I cut quick even before they reach the S/L point. There’s always a better trade awaiting. I use the saving on the failed trade to fund it. That’s my number 1 money management rule. Cut losses early, lose small, not big. Stay in the game.

Best of luck - family and all - I think you’ll need it.

Yes, this is a very good policy. The policy by which risk and emotion can be maintained.

“On profitable trades I continue to move the S/L until I’ve reached breakeven” - this is exactly what I mean, once the trade is profitable can you set the S/L above your original entry?

In no way I would place the S/L above the entry when making a trade. This is pointless and a recipe for disaster.

Many thanks for your comments. Much appreciated.

Wait a tick. If we’re talking about moving your stop to break even (or a break even + a few pts) to mitigate a potential loss after a position moves in your favor and then something changes- that is a pro move. No need to take an L to prove to a market that doesn’t care if you were right or wrong initially.

Yes, you could do that providing the S/L is below the current price level. it’s easier, IMO, to set up a T/P price, which you can always trail by invoking that process by clicking on the Profit order next to the S/L.

That way you don’t have to watch it all the time.

Thank you all.

I have tested that last night on SELL NZDUSD. I entered at 0.71314, then started moving “S/L” down as the position was going down (profitable for me - SELL).
Once I was in profit I changed S/L from 10pips to 5pips to maximise the potential profit.
Eventually I closed at 0.71215 with a profit of $99.00.

Hopefully all of this makes sense.

Many thanks to all that contributed!

Yes, you can. I use this formula in every trade. It helps me manage risk.

Absolutely you can, @chazpl. It’s a good strategy to make profits as well as to avoid any potential drop risks.