I recently opened a short position on EUR/USD. The opening price was 1.3250. I set my SL at 1.3270 ie 20 pips and my TP at 1.3210 ie 40 pips. I sat watching the chart and got all excited as the candle dropped lower and lower and lo and behold reached 1.3210 (and just passed it) Having opened the position with a deal size of 5000 EUR I was rubbing my hands together having just hauled in 20 bucks. But alas the position did not close!!! instead the candle retreated at a rapid rate and I saw my well earned cash going down the drain…so I closed the position and scored only 12 bucks.
I contacted my coach who has been assigned to me by my broker and asked him why??? His explanation was that the low ask for the day was 1.3211 and that as I had exceeded this price by 1 pip my position hadn’t closed.
I am confused…does this mean that my take profits cannot be below the ‘low ask’ or above the ‘high bid’ for the day? Please please can someone advise
This is one of the hard earned lessons I learned early in trading. Most brokers have a bid price and an ask price and you can change the view of your chart to see either.
The broker can manipulate price or trigger SL in this way also. Hence the reason around news if your stop is near the current price you may want to consider a looser stop. This can also be used by brokers to SL hunt and take you out of the market.
My experience - I had a trade open and I was not aware of the different Buy / Ask views and my 50 pip SL was triggered but from what I could see the price had never reached my SL price… I was enraged and thinking this was slippage contacted my broker where they explained as you noted above. The “Ask” price had triggered the stop.
This can never be answered and it all depend on what kinda Stock, currency etc. you are dealing with. But most common is learning and then applying the same. It does not matter if it was profit or loss as long as you have learn the right methods. For me I always take profit as soon I can pouch on it. Greediness can be dangerous. Suppose if you really want to check if the profit will go up then in short 1 minute or 5 minute you can wait. Once you see the price has started dropping then think no further to close the position. Don’t ever cry if profit margin goes up after you close position and never be happy if loss would have started if you did not close the position. So the simple answer is to be strong in decision making and never ever regret what you did but instead learn from it like good student.
Three different answers on this thread, and none of them actually hit the mark.
Let’s start with the basics. You buy at the ask, and sell to the bid.
You entered this trade short, which means you have to buy to exit. Since the MT4 charts are drawn using only the bid price, you didn’t see exactly where the ask was. You needed the ask to touch, or cross the 1.3211 mark by more than whatever broker’s spread was at the moment. In most case, the E/U is either 2 pips, or slightly over. Again, since the MT4 platform uses the bid to draw the chart, you needed the bid to touch 1.3209 or less by a touch.
You were unlucky with either the entry price, or just the fact that you used a 2:1 static risk/reward number.
You should enable the “ask” line. You’ll see both of them on your chart at the same time that way.
Right click anywhere on the chart, scroll down, select “properties”. Click the “Common” tab at the top of the window that pops up, scroll down, and select “Show Ask Line”.
If you don’t like the color, click properties again, select the “colors” tab, and adjust to your preference.
But above all, pay attention to previous action of price around the numbers you chose for both stop, or take profit options.
If it bounced close to that number previously, chances are high it will react the same way there again. Take a little less off your take profit in order to better assure yourself a successful trade.
I only trade EUR/USD. My broker has a 3 pip spread and takes his spread on opening the position. In other words everytime I open a position the P/L is -3 pips.
So once I’ve gained those 3 pips surely anything beyond that should be profit for me?
Recently I opened a short position and purposely set my TP beyond the low ask for the day to see if I would be closed out and wasn’t and made myself a fairly decent haul.
Hahaha…
Just 12 buck is enough guys. You should thanks for that. You can gain it more again and again.I think that it was pretty volatile market, so your TP can’t be executed.It’s normal,
In which broker so you trade?. I suggest you to join in lite forex broker, it’s great and very fair broker guys…
20 to 30 pips are safe for stop loss and take profit. You can get some pips profit in this range easily . Market moves 5 to 10 pips in fluctuation mostly so your SL and TP should have at a iont where it can make movement and not hit SL first . You r market analysis willhelp to pick profits first.
I always stress on the point that the stop loss should always be placed at the strong support or resistance levels according to the trade opened so that it is not easily hit by the market fluctuation.
yes after strong analysis point of stop loss and take profit should be decided. it is not enough to just set these two tools they are effective toward your benefit if you are good in market reading. Other wise your stop loss will hit and sure loss will for you.
Duncan your problem is not the bid and ask price which will imply a spread in EUR/USD for example the quoted currency is the USD and Base is EUR mean the buy and sell is of the EUR so not bid or ask quote issue that really only matters on entry.
The problem is execution, the brokers fine print say they have up to 10 mins to execute on news days because volatility is too high and in some cases will lead to re-quote. Make sure your brokers execution is solid. Be comforted in the fact that you could not have done a thing about except find a broker that will guarantee stops and TP levels. Not easy to find…
Trade longer time frames to protect against execution problems. Hope this helps…