This stop loss and take profit technique is unique: being very efficient, safe and accurate, it can be applied for day trading, swing trading and scalping.
In this article, I will teach you how to easily place stop loss and take profit, applying just one basic technical tool.
Imagine that you are planning to open a trading position. You may decide to open a swing trade on a daily, a day trade on an hourly time frame, or a scalping trade on 15 minutes time frame.
For the sake of the example,
we will take a short position on GBPUSD on a daily,
a short position on NZDUSD on an hourly time frame,
and a long position on USDCHf on 15 minutes time frame.
In order to identify safe levels for TP and SL on GBPUSD, identify the closest key horizontal support and resistance on a daily time frame.
When you underline key structures, make sure that you consider the candle closes and the wicks, so that the key structure would represent the area.
Your safe stop loss will be strictly above the closest horizontal resistance,
while your target will be the upper boundary of a key horizontal support.
Selling NZDUSD on an hourly time frame, identify the closest key horizontal support and resistance on an hourly time frame.
Your safe stop loss will lie above a key resistance,
and your take profit will be the upper boundary of a key support.
Buying USDCHF on 15 minutes time frame, you do the same thing.
You identify the closest support and resistance.
Your safe stop loss will be below a key support, while your take profit will be a lower boundary of a key resistance.
Planning your trade, always remember to assess the reward to risk ratio of your trade.
If the risk is bigger than the reward, such reward to risk ratio will be called negative.
Such a trade is better not to take. While, the trade where reward exceeds risk will have a positive r/r ratio.
Such a trade we can take.
This stop loss and take profit placement technique is not perfect.
With experience, you will learn to set even safe stop loss and take profits, but for beginners, that is one of the safest strategies to follow.
