Complete Guide on the Take Profit Order
The take profit order can be said to be a particular order that helps you to close your trade the moment you notice that it has reached a specific level. The moment you take profit order hits in a specific trade, that particular trade will be closed on the actual value of the market. All you need to do is to take the profit order, and it is most cases it is regarded as the limit orders in the trading session.
Why it has to be used strategically
One thing about the take profit order is the fact that it is always attributed to the stop-loss option; with this you will be able to define the ratio of your risk to the reward. The risk to reward pattern can be more relevant than the trading strategy that you make use of. The take profit order gives you the chance to limit the amount that you will be risking because you will be able to leave the market as soon as you make a reasonable profit.
This is about the strategy of short term trading. One of the popular approach that you can make use of is the true average range or the pivot points, and they will help you in defining the right time to which you can take the profit. Situations, whereby an average trader does not know when to take profit, can be disastrous
The strategy that we prefer for an intraday trade is that of the average true range. Of course the weekly or daily pivot points can as well be used. There is every possibility that retracement can happen when the market hits a particular level.
Is it advisable to make use of take profit order?
There are variations on how the traders manage their risk, and there is some certain question that you will have to ask yourself to decide whether you will like to use the take profit order. To start with, if you are on a long term trade, the long term trend is what you are likely to take due advantage of. People who make use of take profit technique are always frustrated when they see a good trend staying for a long time and they have backed out too early.o figure
What the indicator can help you on
Provision has been made for so many indicators that can help you to figure out the kind of trend that is in play. They include the Relative Strength Index and the Moving Average.
The Average Directional Index gives you the chance to view a scale of 0 to 100. With this, you will be able to figure out how the trend of a pair is moving.
If it ranges below 30, it is an indication that you can make use of the take profit technique. On the other hand, if it is above 30, it is not advisable to use the technique.