Quick take profit and stop limit parameters. Take profit and stop limit: what is it how to place an order correctly
Stop order(from English - Stop limit) Is an order, the execution of which is postponed until the condition specified in it occurs. That is, the order is not active until the price of the security reaches or crosses the price previously set by the investor. This price is called the "stop price". After that, the stop order becomes a market buy or sell order.
A stop order can be divided into a stop order to sell and a stop order to buy securities: Stop order to sell (Sell stop order) - turns into a market order to sell as soon as a deal occurs at a price not lower than the specified price. A stop order to sell is always placed below the current market price. It is usually used to limit losses or to protect profits on a long position.
Stop order to buy (Buy stop order)- turns into a market sell order as soon as a transaction occurs at a price not lower than the specified price. A stop order to buy should always be placed above the current market price. It is usually used to limit losses or to protect profits on a short position.
Let's take a sell stop order. Let's say you have already bought several shares. To sell shares and make a profit, you wait for their price to rise. To limit your losses, you place a stop order to sell. In English it is called Stop-loss... Such an order is automatically triggered when the price reaches the specified level, which does not differ from the operation of a regular limit order. The difference between a stop order is that you have the opportunity, within the framework of one order, to limit the possible loss and fix the price at which your order should be closed with a profit. Stop order with profit taking is called Take-profit.
Let's look at this process with an example. Let's say you have shares purchased at 200 rubles per lot. And you want to sell them for 220 rubles. At the same time, you want to limit possible losses and are ready to close the position with a loss at a price of 180 rubles.
In order to do this, you can place a stop order, where in the first part you will indicate the execution price equal to 180 rubles (in case of a price decrease), and in the second part you will place 220 rubles (the price at which you will sell the shares at a profit). When one of these conditions is met, the second will be canceled - this is the meaning of stop orders.
Therefore, even if you do not follow the positions and quotes, in case of growth, the profit due to the stop order will be fixed, and otherwise the losses will be limited. A stop order to buy is also placed. It will be triggered when the stop price is reached in the order.
It is also worth noting that if the order becomes active, then its execution is guaranteed, but the execution price is not guaranteed. This is possible when the stock price moves rapidly in a given direction.
For example, in a company whose assets you have acquired, an industrial accident may occur, which will entail a flood of lawsuits and a rapid drop in the share price to 100 rubles per share. In this situation, you may simply not have time to execute a sell stop order at a price of 180 rubles, and then the real execution price may be, say, 160 rubles.
In addition to the considered types of applications, there is one more - Trailing-stop... It works as follows: a trader places an order in which losses are limited by a stop-loss order. The stop-loss level will move along with the growth of stock quotes. The amount of growth will be indicated in the same application. It can be indicated both in rubles and as a percentage of the asset value. However, if the share price stops growing and starts falling, the stop-loss level will be fixed and will remain in place.
Let's take the following situation as an example. Let's say you have shares purchased at RUB 200 per lot and you want to limit your loss. You need to place a stop order for 20 rubles lower. If the course shares will fall, and reaches the price of 180 rubles, the position will be closed. If the price starts to grow and, for example, reaches 202 rubles, then the stop order will rise by 2 rubles. And the difference between the stop order price and the current order will still remain equal to 20 rubles. If the price rises to 240 rubles, the stop order will rise after it to 220 rubles.
Stop order can only move in one direction - towards improvement financial result... After raising it, nothing can bring it down. If we return to the example: let the share price rise to 250 rubles, at the same time the stop order reached the value of 230 rubles. If, suddenly, the share price goes down and reaches its initial value of 200 rubles, then your position will be closed at a price of 230 rubles.
How to set take profit and how to set stop loss.
Conditional order (stop order) - a pre-prepared limit order transmitted to trading system exchange upon the occurrence of a condition (stop price). A stop order is used to limit the amount of losses when trade prices change in the direction opposite to the expected one. Stop price is a condition for order execution in the form of the boundary value of the price of the last transaction for an instrument.
Types of conditional orders in the QUIK system.
The QUIK system contains the following types of conditional orders:
« Stop Limit»- a stop order that generates a limit order when executed.
PURPOSE: Limiting the amount of losses when the transaction prices change in the direction opposite to the expected one.
« Stop price for another security"- an order of the" Stop Limit "type, the condition of the stop price of which is checked for one instrument, and another instrument is indicated in the executed limit order.
PURPOSE: Used in specific trading strategies, for example, when the price of the underlying asset is a condition of a stop order for a futures contract.
« With related application"- these are two orders for the same instrument, the same in direction and volume. The first order is of the "Stop-Limit" type, the second is a limit order. When one of the orders is executed, the second is canceled. This type of order is also called "O.C.O." (one cancel other, "one request cancels another").
PURPOSE: This type of order is intended for closing a position. A stop order is used to fix losses, and a limit order is used to fix profits. The advantage of a linked order is that for the execution of a limit and stop orders, the limits are blocked once, and when a position is closed in one direction, the linked order is automatically canceled.
« Take profit"Is an order with a condition of the form" execute when the price deteriorates by a specified value from the reached maximum (for sale) or minimum (for purchase). " price starts determining the high of the price of the last deal. If the price of the last deal decreases from the maximum by an amount exceeding the specified "indent", then a limit order is created with a price lower than the price of the last deal by the amount of the "protective spread". The "indent" and "guard spread" values can be specified both in price values and in percentages.
PURPOSE: Closing a position for the instrument with the maximum profit.
Stop orders can be entered in the tables:
Quotes table (order queue), Orders table, Stop orders table, Deals table, All deals table, Current parameter values table, Transactions pocket.
The "Stop-order" window is opened by:
- By clicking the button on the toolbar
- By pressing the "F6" key
The window, depending on the settings, can have a full (right) or simplified (left) form. A stop-order, formed using a simplified form, has the "Stop-Limit" type and is valid within the current trading session. Using the full order entry form, you can create stop orders different types... Stop orders do not include the “Market” order type. When the condition (stop price) occurs, the stop order is transmitted to the trading system in the form of a limit order.
Filling out the application form:
« Stop order type»- selection of one of the possible types of instructions. Makes available special fields related to a specific type of stop order. If necessary, the window for entering the application takes an extended form.
« Validity"- if the value" today "is selected, then the order is valid until the end of the current day, otherwise the order is valid until the date selected in the" by ... "field, or until the order is canceled, if the value" before cancellation "is selected.
NOTE: Stop orders "With a linked order" are valid only during the current trading session.
« Tool»- selection of an instrument from the list of securities of this class. To find an instrument in the list, type the first letters of its name from the keyboard (context search is enabled in the Settings / General / Transactions menu).
« Trading account»- code of the trading account in respect of which the order is being made. If one account is assigned to the user, the field will be filled in automatically. If several accounts are available, you will need to select the required account from the list or use the "Specify securities account by client code" setting.
« Request activation condition"- select the direction of the order:" Buy "or" Sell "and enter the value of the stop price.
« If the price<=» (или «>=) »- selection of the controlled condition of the stop price in relation to the price of the last deal of the instrument. The parameter can be configured manually for "Stop orders with a condition on another security", for other types it is selected automatically: for a buy order: the price of the last deal has become> = stop prices. This condition is used, for example, to limit losses from an increase in the price of an instrument sold short. For a sell order: the price of the last deal became<= стоп-цены. Это условие используется, например, для ограничения убытков от падения цены купленного инструмента.
The stop price value is indicated in the window to the right of the condition selection.
"Price" - the price of the order, per one unit of the financial instrument.
"Lot" - the number of units of the selected securities instrument in one lot.
“Quantity” - the number of securities expressed in lots.
"Client code" - client identifier in the QUIK system.
"Order" - a text commentary to the application.
Parameters of the extended order entry form, expanding by clicking the "More >>" button:
"" - the name and class of the instrument, by which the stop price condition is controlled. Parameter of an order of the "Stop price on another security" type.
« Place a linked order to buy (sell) at a price.»- the price of execution of the linked limit order. Parameter of an order of the "With linked order" type.
« In case of partial execution of a linked order, remove a stop order»- if the checkbox is checked, then in case of partial execution of the linked limit order, the stop order becomes canceled. If the checkbox is cleared, then in case of partial execution of the linked order, the volume of the stop order is reduced to the value of the outstanding remainder of the limit order.
« Set "take profit"- parameters of a take-profit order:
« Indent from max (min)»- sets the value of the offset from the maximum (for sale) or minimum (for purchase) of the last deal price, upon reaching which a limit order will be generated. The offset value can be specified both as a price deviation and as a percentage.
« Set protective spread»- sets an additional (advanced) deviation of the order price from the price of the last deal that initiated the order. The protective spread is designed to set the price of the created order that will be executable.
« Volume»- evaluation of the application in monetary terms. Allows you to calculate the "Number" of securities in the order for known amount of money. To do this, enter the amount in the "Volume" field Money and press the "Set quantity" button. In this case, the number obtained as a result of recalculation and rounded down to the nearest integer will be entered in the “Quantity” field, and the monetary value of the application for the given “Quantity” will be entered in the “Volume” field.
« Commission" - sum brokerage commission from the volume of the application. The field is calculated automatically in accordance with the established algorithm.
If one of the points of the order is not provided for a certain type of conditional order, then it becomes "gray" (inactive).
Entering a Stop-Limit order in the Quik system
« Stop Limit»- a stop order, which generates a limit order when executed, serves to limit the amount of losses when the transaction prices change in the direction opposite to the expected one.
- Double-clicking the left mouse button in the "Table of stop orders"
- By pressing the "F6" key
- By selecting the "New stop order" context menu item in the table
- Using a general method of performing transactions with the choice of the "Stop-order" operation
« Stop order type"- select" Stop Limit "from the drop-down list.
« Validity
« Tool»- choose from the list, security, for which you want to set the "Stop Limit". "Trading account
« Request activation condition»If you are in a short position and want to limit your losses when the price rises: select" Buy "and set in the" stop limit if price> = "field the value of the stop price, upon reaching which your order will be triggered. If you are in a long position and want to limit your losses when the price falls: select "Sell" and set in the "stop limit if the price<=» значение стоп-цены при достижении которой сработает ваша заявка.
« Price"- set the value of your order execution.
« Quantity
« Client code
« Assignment
An example of using a Stop-Limit order:
Suppose that LUKOIL shares are bought from you at 1835 rubles, you want to limit your losses when the price falls. The maximum loss that you are willing to incur is 10 rubles from the price of each share. To do this, you need to place a sell stop limit, in which the price of 1825.5 is indicated in the condition for activating the stop order; rubles, that is, the price at which your stop order is activated and the execution price is 1825 rubles. For a buying situation, everything is done exactly the opposite.
Entering a "Take Profit" order in the Quik system
« Take profit"Is an order with a condition of the form" execute when the price deteriorates by a specified amount from the reached maximum (for sale) or minimum (for purchase) ". Serves for closing a position on an instrument with the maximum profit.
The order works as follows (example for a sell order): after the price of the last deal reaches the stop price condition, the determination of the maximum price of the last deal begins. If the price of the last deal decreases from the maximum by an amount exceeding the specified "indent", then a limit order is created with a price lower than the price of the last deal by the amount of the "protective spread". The "indent" and "guard spread" values can be specified both in price values and in percentages.
Open the window for placing "Stop orders" through:
- Clicking a button on the toolbar
- Double-clicking the left mouse button in the "Table of stop orders"
- By pressing the "F6" key
- By selecting the "New stop order" context menu item in the table
« Stop order type"- select" Take profit "from the drop-down list.
« Validity»Put an end to it depending on how long you want to place an application. "Today" - the application is valid until the end of the current day, "By" - the application is valid until the selected date, "until canceled" - the application is valid until you cancel it.
« Tool
« Trading account»- if you have several trading accounts, then you need to select the code of the trading account for which the order is being made. If one account is assigned to the user, the field will be filled in automatically.
"Order activation condition" if you are in a short position and want to fix your profit, select "Buy" and set in the "take profit if the price<=» значение стоп-цены при достижении которой сработает ваша заявка. если вы находитесь в длинной позиции и хотите зафиксировать свою прибыль выберите "Продажа" и установите в поле «тейк-профит, если цена >= "The value of the stop price, upon reaching which your order will be triggered.
« Quantity"- set the number of securities, expressed in lots.
« Client code"- client identifier in the QUIK system (optional).
« Assignment"- a text commentary to the application. (not necessary).
"Set" take profit "
« Indent from max (min)»- set the value of the offset from the maximum (for sale) or minimum (for purchase) of the last deal price, upon reaching which a limit order will be generated. The offset value can be specified both as a price deviation and as a percentage.
« Set protective spread»- set an additional (advanced) deviation of the order price from the price of the last deal that initiated the order. The protective spread is designed to set the price of the created order that will be executable.
An example of using a take-profit order:
Suppose that you have bought shares of OAO "Gazprom" for 193 rubles, you plan to sell them at least 200 rubles. You need to put a take profit for sale, in which the price of 200 rubles is indicated in the condition for activating the stop order.
It also specifies two additional parameters:
- "Offset from max" - this parameter indicates how much the price of the last deal can be lower than the local maximum of the price;
- “Protective spread” - how much less than the take profit triggering price will be the price of the limited sell order generated by it.
The price grows and reached 201 rubles, after which it fell to 200.60 rubles and began to grow again. Take profit in this case will not turn into a limited order - after all, the price dropped from the maximum by 40 kopecks, and we set the "offset from the max" = 50 kopecks, i.e. the performance condition has not been reached. Then the price rose to 202.20 rubles and fell to 201.70 rubles - here our take-profit is activated and generates a limit sell order with a price calculated according to the following formula: “current price of the last deal” - “protective spread”. Those. the selling order price will be 201.70–0.2 = 201.50 rubles. The “protective spread” must be specified to protect against the “slippage” of the market below the price of the order generated by the take profit.
For a buying situation, everything is done exactly the opposite.
Entering an order of the "Take profit and stop limit" type in the Quik system
Take profit and stop limit are two orders for the same instrument. The first order is of the "Stop Limit" type, the second is of the "Take Profit" type. A stop order is used to fix losses, and a take profit is used to fix profits. This type of order is intended for closing a position. When one of the orders is executed, the second is canceled. To execute stop orders and take profit orders, the limits are blocked for each order.
Open the window for placing "Stop orders" through:
- Clicking a button on the toolbar
- Double-clicking the left mouse button in the "Table of stop orders"
- By pressing the "F6" key
- By selecting the "New stop order" context menu item in the table
- Using the General method of executing transactions with the choice of the "Stop-order" operation
« Stop order type"- select" Take profit "from the drop-down list
« Validity»Put an end to it depending on how long you want to place an application. "Today" - the application is valid until the end of the current day, "By" - the application is valid until the selected date, "until canceled" - the application is valid until you cancel it.
« Tool»- select from the list the security for which you want to set" Take-profit ".
« Trading account»- if you have several trading accounts, then you need to select the code of the trading account for which the order is being made. If one account is assigned to the user, the field will be filled in automatically.
« Request activation condition»If you are in a short position and want to fix your profit, select" Buy "and set in the" take profit if the price<=» значение стоп-цены при достижении которой сработает ваша заявка. если вы находитесь в длинной позиции и хотите зафиксировать свою прибыль выберите "Продажа" и установите в поле «тейк-профит, если цена >= "The value of the stop price, upon reaching which your order will be triggered. if you are in a short position and want to limit your losses when the price rises: select "Buy" and set in the "stop limit if price> =" field the value of the stop price, upon reaching which your order will be triggered. if you are in a long position and want to limit your losses when the price falls: select "Sell" and set in the "stop limit if the price<=» значение стоп-цены при достижении которой сработает ваша заявка.
« Quantity"- set the number of securities, expressed in lots.
« Client code"- client identifier in the QUIK system (optional).
« Assignment"- a text commentary to the application. (not necessary).
An example of using a Take Profit and Stop Limit order:
Suppose that you bought RNZ0 futures at 21,930 rubles. You plan to sell them at least 21,940 rubles, and you also want to limit your losses with the opposite price movement at the level of 21,925 rubles. To limit your losses, set the conditions for activating the stop limit, for this in the field “stop limit, if the price<=» установим значение 21925 рублей. Чтобы зафиксировать полученную прибыль нужно в поле «тейк-профит, если цена >= "Indicate the price of 22940 rubles. Also, two additional parameters are indicated: "offset from max" - this parameter indicates how much the price of the last deal can be lower than the local maximum of the price; “Protective spread” - how much less than the take profit triggering price will be the price of the limited sell order generated by it. More details about the two above-mentioned parameters are described in the section "Entering a take-profit order in the Quik system" Next, enter the execution price for a stop-limit order - 21,925 rubles; The execution price for a take-profit order is determined by a calculated path (automatically).
Entering an order of the "With linked order" type in the Quik system
« With related application"- these are two orders for the same instrument, the same in direction and volume. The first order is of the "Stop-Limit" type, the second is a limit order. When one of the orders is executed, the second is canceled. This type of order is also called "O.C.O." (one cancel other, "one request cancels another"). This type of order is intended for closing a position. A stop order is used to fix losses, and a limit order is used to fix profits.
The advantage of a linked order is that for the execution of a limit and stop order, the limits are blocked once, and when a position is closed in one direction, the linked order is automatically canceled.
Open the window for placing "Stop orders" through:
- Clicking a button on the toolbar,
- By double clicking the left mouse button in the "Table of stop orders",
- By pressing the "F6" key,
- By selecting the "New stop order" context menu item in the table,
- Using the general method of performing transactions with the choice of the "Stop-order" operation.
« Stop order type"- from the drop-down list select" Connected. application ".
« Validity
« Tool"- select from the list the security for which you want to place an order of the type" With link. application ".
« Trading account»- if you have several trading accounts, then you need to select the code of the trading account for which the order is being made. If one account is assigned to the user, the field will be filled in automatically.
« Request activation condition»If you are in a short position and want to limit your losses when the price rises: select" Buy "and set in the" stop limit if price> = "field the value of the stop price at which your order will be triggered.> If you are in a long positions and want to limit your losses when the price falls: select "Sell" and set in the "stop limit if the price<=» значение стоп-цены при достижении которой сработает ваша заявка. «Цена» – установите значение исполнения вашей заявки.
« Quantity"- set the number of securities, expressed in lots.
« Client code"- client identifier in the QUIK system (optional).
« Assignment"- a text commentary to the application. (not necessary).
"Place a linked order to buy (sell) at the price .." - set the execution price of the linked limit order. "If a linked order is partially executed, remove the stop order" - if you want the stop order to be canceled during partial execution of a linked limit order - check the box. If you want the volume of the stop order to decrease to the amount of the outstanding balance of the limit order in the case of partial execution of a linked order, uncheck the box.
An example of using an application of the type “With communication. application ":
Suppose that you bought RNZ0 futures at 21,911 rubles. You plan to sell them at least 21,920 rubles, and you also want to limit your losses with the opposite price movement at the level of 21,901 rubles. To limit your losses, set the conditions for activating the stop limit, for this in the field “stop limit, if the price<=» установим значение 21901 рублей. Чтобы зафиксировать полученную прибыль в поле «Выставить связанную заявку на продажу по цене..» установим значение 21920 рублей. Далее введем цену исполнения - 21901 рублей и количество лотов, которое хотим продать. Если ваши ожидания оправдаются и цена пойдет вверх, то выставленная вами связанная лимитированная заявка исполнится по цене 21920 рублей, а стоп-заявка будет автоматически снята системой. Если же связанная лимитированная заявка исполнится частично, например только на 30 %, в этом случаи объем стоп-заявки уменьшится до величины неисполненного остатка лимитированной заявки, то есть до 70%.
Entering an order of the "Stop price on another security" type in the Quik system
« Stop price for another security"- an order of the" Stop-Limit "type, the condition of the stop-price of which is checked for one instrument, and another instrument is indicated in the executed limit order. It is used in specific trading strategies, for example, when the price of the underlying asset is the condition of a stop order for a futures contract.
Open the window for placing "Stop orders" through:
- Clicking a button on the toolbar
- Double-clicking the left mouse button in the "Table of stop orders"
- By pressing the "F6" key
- By selecting the "New stop order" context menu item in the table
- Using the General method of executing transactions with the choice of the "Stop-order" operation
« Stop order type"- select" Stop price for another security "from the drop-down list.
« Validity»Stop orders" With a linked order "are valid only during the current trading session.
« Tool"- select from the list the security for which you want to place an order of the" Stop price for another security "type.
« Trading account»- if you have several trading accounts, then you need to select the code of the trading account for which the order is being made. If one account is assigned to the user, the field will be filled in automatically.
« Request activation condition"Set in the field if price> =" the value of the stop price, upon reaching which your order will be triggered. set in the field if price<=» значение стоп-цены при достижении которой сработает ваша заявка. «Цена» – установите значение исполнения вашей заявки.
« Quantity"- set the number of securities, expressed in lots.
« Client code"- client identifier in the QUIK system (optional).
« Assignment"- a text commentary to the application. (not necessary).
« Take the stop price for the instrument»- specify the name and class of the instrument for which the stop price condition is monitored.
An example of using an order of the "Stop price on another security" type:
There are several options for using an order of the "Stop price on another security" type, let us consider each in more detail:
1. As you know, limit orders in the Quik system are valid only during the current trading session. To get around this rule, you can use an order of the "Stop price on another security" type. Suppose that at the moment the price per share of OAO Gazprom is 191 rubles, you think that there is a downward trend in the price and want to buy shares in the future when the price reaches 171 rubles. To do this, you need to set the same asset in the "Instrument" and "Take stop price for the instrument" fields, in our case it is "Gazprom Jsc". Next, we will set the conditions for activating the order, the price is 171 rubles, the execution price is 171 rubles, the number of lots that we want to purchase and the validity period of the order "Today" - the order is valid until the end of the current day, "By" - the order is valid until the selected date, "until canceled "- the application is valid until you cancel it. Then press the "Enter" button and wait for the order to be executed.
2. Using this order, you can buy or sell shares based on the price of another instrument. Let's consider the situation using the example of a futures and Rosneft shares: You bought Rosneft shares at 219.35 rubles, the price of RNZ0 futures is 21,915 rubles. You plan to sell shares at 220 rubles when the price of the RNZ0 futures rises to the level of 21,920 rubles. Thus, when the RNZ0 futures price is set at 21,920 rubles, the system will automatically submit an order to sell Rosneft shares at a price of 220 rubles. To do this, you need to set in the "Instrument" field - "Rosneft", in the "Take stop price for the instrument" field, select the instrument class - FORTS futures and the name of the instrument - "RNZ0". Next, set the conditions for activating the order, the price is 21,920 rubles, the execution price is 220 rubles, the number of lots that we want to sell and the validity period of the order: "Today" - the order is valid until the end of the current day, "By" - the order is valid until the date, "until canceled "- the application is valid until you cancel it. Then press the "Enter" button and wait for the order to be executed.
In addition, this type of order can be used as a regular "Stop Limit".
Stop Loss and Take Profit are the main means of position management. Whoever says what, but the only thing we are able to control in the market is the entry point and the amount of risk. To find the point of entry into the market, the trader uses a trading strategy, and to control the amount of risk, stop loss.
What is stop loss
As I said, a trader needs a stop loss to limit possible losses if the price goes not in his direction. Its size is the amount that you are willing to risk for the sake of probable profit. Let's take an example. Let's say you bought 5 lots of any currency pair, in order to close it, you need to sell these five lots. You have two exits: sell 5 lots at a take profit (that is, when the price is above your entry point), or at a stop loss at a loss (when the price is below your entry point). Stop loss is an essential element in the trading process of every intelligent trader. Without a stop loss, loss control becomes practically impossible.
How to set stop loss
For long and short positions, stop losses are placed in opposite directions from the entry point. For example, let's say that you bought 10 shares at a price of 50 rubles, in which case the stop loss will need to be set below the entry point (50 rubles), let's say at the level of 45 rubles. In the event of an unfavorable scenario, when the price reaches the level of 45 rubles, a market sell order will be placed.
And if you sell, for example, the same 10 shares at a price of 50 rubles, the stop loss will need to be set above the market entry point. For example, let it be the price of 55 rubles per share. In the event that the price moves against you and reaches the 55p mark, a stop loss will be triggered and a market buy order will be automatically placed at this price.
How to set a stop loss in a quick (QUIK)
In order to set a stop loss, in the QUIK terminal, you need to click on the icon in the form of raised fingers with the letter S.
After that, a window will appear in which you will need to set the parameters of the stop loss execution. The most important thing is to indicate the price and the number of contracts. In the box number (lot), you need to put the number of lots or contracts for which you opened a position. Next, we indicate the condition for activating the order. As I explained in detail above: if you have a long position (you bought assets), then you need to select the "Sell" item. And in the event that you shorted before that (sold without coverage), then you need to select the purchase item. After that, select the price, upon reaching which the stop loss will be triggered. Again, if you are in a long position, then the price must be quoted below the entry price. If you are in a short position (Short), then we set the price below the entry point. Having indicated the price of triggering the stop loss, you must also indicate the price at which the order will be placed. Look here at your own discretion, but in my opinion, it is best to select the "At market price" item as it is the safest.
First, you need to open the window for placing orders by clicking "New order" in the top menu. Then, in the window that appears, set the stop loss in the Stop Loss field at a distance from the market entry. When choosing its size, you need to proceed from the rules of the trading strategy and risk management.
How to move stop loss
In general, it is not recommended to do this, especially for beginners, as it can negatively affect trading results due to violation of the rules of risk management and the trading system. But, there are times when it is necessary to do this. Moving the stop loss is very simple, you need to move the mouse over the line of which the stop loss location is marked on the chart, hold down the left mouse button and drag the stop in the desired direction.
How to enter a position using a stop loss
Most traders know that it is necessary to set stop losses in order to play profitably on Forex, but not all of them use them. In addition, you should understand the reasons for their use, the main of which we will describe here. The main thing here is not to mix it up: if you open a buy trade, then the stop loss must be placed below the entry point, and if you open a sell trade, then the stop loss is set above the entry point.
Trailing stop
One of the very interesting types of stop loss. This type of stop loss is automatically pulled up following the price through a certain step. It is most often used for trending strategies, as it allows you to squeeze the maximum out of the movement. Among the downsides is the fact that such a stop loss can often knock out random market noise. Therefore, some traders exit the position in parts. That is, only part of the position is closed using the trailing stop.
Correct attitude to stop loss
Stop losses allow you to keep your losses under control
Stop loss makes it possible to control the amount of loss in each individual transaction, and also excludes the loss of the entire deposit. Controlling losses allows the trader to ultimately make a profit, since the ruble saved equals the ruble earned. So if you want to gain a foothold in this business, you need to pay special attention to loss control, that is, to be able to effectively use stop losses.
Before entering a trade and placing a stop loss, it is very important to understand that the size of your stop is the amount that you do not mind losing in the market. You must be mentally prepared for the fact that the stop loss will work and this should not affect your emotional balance in any way. Hope for the best, but prepare for the worst.
Stop losses relieve emotional stress
There is no need to worry about the safety of the deposit if you opened a position with a stop loss. After that, you can even forget about the trading terminal for a while, and not sit constantly at the monitor and watch the floating profit or loss. A stop order is your consent to a possible loss, because everything that you were able to do, you have already done. All that remains is to wait for the financial result.
Stop losses show that the analysis of the market situation was not carried out correctly
A triggered stop loss is an indicator that your forecast or analysis turned out to be wrong, because the situation is not developing as you expected. You do not need to make an operation in the direction in which a losing trade was made. Stop loss showed that your forecast does not coincide with the market trend and you should change your mind about the situation as quickly as possible in order to be able to receive income.
Stop losses allow you to enter the market at a more profitable quote
When entering a trade, you need to focus on the size of the stop loss, and not on the amount of possible profit. A stop order should be placed at a logical level, so that when it is triggered, it is unambiguous to understand that the analysis of the situation in the foreign exchange market turned out to be incorrect. You need to open a position at the lowest price so that the stop loss is small. Therefore, when making a deal, you need to take into account the stop loss level. When it turns out to be large and does not meet the requirements of your risk management and money management, then you should abandon this transaction and wait for the next good trading signal.
Take Profit what is it
If stop loss is needed to fix losses, then take profit is needed to fix profits. Take profit is an order to close a position with a profit, if the price moves in the direction chosen by the trader. The potential profitability of the deal depends on the size of the take profit.
How to set take profit
Take profit is set in a mirror image relative to stop loss. If you have opened a buy trade, then take profit should be set above the market entry point. If you have a sell trade open, then take profit should be placed below the entry point.
How to set take profit in Quick (QUIK)
In the terminal, quick take profit can be done in two ways:
By pre-configuring the possibility of quick installation and withdrawal of an order through the glass
And directly on the chart
How to set take profit in MT4
This is done in the same window. Only in the place of the stop loss setting field you need to correct the take profit setting field. An even easier way to set both stop loss and take profit is to pull the line marking the entry point to the market after the order is executed. If you made a buy deal, then by pulling the line up, you will get a take profit, and by pulling down the stop loss. For a sell trade, the opposite is true.
Stop Loss and Take Profit Ratio
For different strategies, a different ratio of stop loss to take profit is suitable. The main variations are shown in the figure below.
1 to 3 ratio
This ratio of take profit and stop loss is suitable for trend strategies. In this case, you will be "catching" stop losses more often, but if you take a take, you will beat off 3 stops at once. It turns out that in order for the strategy to be profitable, you need to have 30 profitable trades out of 100.
1 to 2 ratio
Stop losses will be triggered less often, but accordingly, the profit in case of a successful trade will be lower. The minimum number of profitable trades for a given stop loss to take ratio is 40 out of 100.
1 to 1 ratio
In this case, in order to obtain a positive mathematical expectation, you need to have even an extremely small margin in positive trades, if the number of positive trades is 55 out of 100, then you will already earn. (don't forget about the commission)
2 to 1 ratio
In theory, the take should be triggered even more often than the stop. By itself, the advantage in positive trades will be greater, but it is worth remembering that if the stop loss is triggered, you will get a double loss. With this ratio, 60 trades out of 100 should be profitable.
Take profit is a certain price value at which the transaction is automatically completed. In this case, income will be fixed, therefore it is also called the level of profit fixing. The take profit level can be set both before and after opening a position, i.e. you can change it without any restrictions. It is important to understand that the profitability of the order directly depends on the correct determination of the take profit level, therefore the take profit level for each open deal is determined individually. Running a little ahead, I'll tell you how to set take profit and stop loss correctly.
I gave the steps described below using the example of the broker Amarkets, through which I traded in Forex for a long time. For full-fledged work, you need to go through a simple registration, after which you can open a trading account in one click, make a deposit and start trading by downloading the trading terminal.
https://my.amarkets.org/sign_up/real/step1/g/0YTMX
In order to set take profit and stop loss levels when opening a position, you need to do the following:
1) Open the Meta Trader trading terminal and log in. If you do not know how to do this, I recommend reading my article on how to start trading Forex on your own.
2) In the toolbar, click the "New order" button
3) In the "Order" window that opens, indicate the values of the assumed levels.
trading terminal Meta Trader
In order to set or change the stop loss and take profit levels after opening a trade, you need to double-click on the line with an open trade in the lower panel of the Meta Trader trading terminal.
How to set the take profit level correctly
I hope everyone is aware that positions (deals, orders, as you like), opened in Forex, differ in the direction of trade and can be long (long, buy, buy) and short (sell, sell). For each of them, the mechanism for setting take profit will be different. I propose to analyze with examples how to correctly set the take profit level for various directions.
For deals opened in the buy direction, the take-profit is set above the starting price. Suppose we conducted an analysis and made a conclusion about the upcoming growth of quotations for the euro-dollar pair (EUR / USD). We decide to enter the market at 1.3685. Analysis and intuition tells us that the price will rise by at least 30 points. set the take profit level to 1.3715.
How to set take profit for long positions
The forecast comes true, and the price rises, having reached the specified level, the transaction is completed automatically. As a result, we will receive a profit of 30 points, regardless of where we were at the time of closing the position.
In this situation, on the contrary, the take-profit level should be below the starting price. Again, in order to understand the effect of this instrument on a short trade, consider the EUR / USD pair. Suppose we entered the market at a sell price of 1.3725 and set a take profit of 1.3685. If after a while the price has decreased and reached the level set by us, then the deal will be closed with a profit of 40 points.
How to set take profit for short positions
Before moving on to considering the stop loss, I would like to draw your attention to one important point: in most cases, you should not change the take profit level during the transaction, it is better to adhere to the initially set value. Greed is not the best advisor for any investment vehicle.
Stop loss - what is it?
Stop loss (stop loss, also called stop limit or moose), like take profit, is a tool for fixing a deal upon reaching a certain price, with the only difference that stop loss serves to minimize the trader's losses. Loss is a means of ensuring the safety of trading on financial markets. When the stop-loss level is reached, the deal is automatically completed, only unlike the take-profit, a loss will be recorded here. However, the principle of operation of both tools is identical.
How to set stop loss (stop loss) for long positions
We will deal with the same pair of euro-dollar (EUR / USD). Let's say we opened a trade at 1.3725 to buy. We indicate a stop loss below this price (for example, let's take 30 points), in case our forecasts turn out to be wrong and the price will fall. When the quote reaches 1.3695, the stop loss will be triggered and the system will automatically complete the deal with a loss of 30 points. The chart shows that after the stop limit was triggered, the price continued to fall, thus. by placing a stop loss, we minimized losses, and maybe even saved the deposit.
How to set take profit stop loss (stop loss) for short positions
In short positions, stop-loss has the same mechanism of action, but its level must be higher than the price at the opening of the trade.
Here's another example: the euro-dollar (EUR / USD) pair on a 5 minute chart. Let's say we decide to open a sell trade at 1.3685 because we thought the price would decline. But just in case, we set a stop loss (above the original price) at 1.3725. As a result, the price went far beyond 1.3725 and the trade was automatically closed with a 40 pips loss.
After you have learned what take profit and stop loss are, the next question that should arise in the head of a novice trader is how to calculate the stop loss and take profit level for each trade? But within the framework of one or several articles, it is impossible to answer this question. Many factors influence such calculations, for example:
features of a currency pair;
trader's intuition and analysis;
duration of the transaction;
trader's strategy;
the amount on the trading account, etc.
As for my trading and investing strategy, I set the stop loss level only in those cases when I know that I will not have access to the terminal for a long time. I insure my deposit against uncontrolled drain. Not using stop loss slightly increases the risks in trading, but my trading account now has about $ 2,000, and I trade in small lots, so the deposit can withstand enormous drawdowns.
Take Profit is an order to automatically close a trade with a profit when the price level specified in advance is reached. Take Profit is translated into Russian as “Take Profit”, so this order is usually placed in cases where a trader cannot continuously monitor an open deal or expects sharp price movements.
HOW DO WE PUT TAKE PROFIT?
Take profit is set for a Buy deal above the order price, since we assume that the price will move up. For example, if we opened a buy trade on EURUSD at 1.12595 and would like to get a profit of 50 points, while not being at the terminal, then after opening a trade we would have to set Take Profit at 1.13195, as shown in Figure 1.
How to set take profit for a buy trade?
For a sell deal (Sell), the opposite is true - take profit is set below the order, because we are waiting for the price to go down. For example, if we have a sell trade at 1.13200, then if you want to get exactly 50 points of profit, you will need to set a take profit at 1.1320 - 50 = 1.12600. In this case, we have five-digit quotes, so 50 points look like 500.
How to set a take profit for a Sell trade?
Note that take profit can be set for all types of orders, including pending orders.
Like the Stop Loss order, Take Profit is executed automatically even when the terminal is closed, i.e. stored on the broker's server.
Let's consider a simple example of how to set a take profit in the MetaTrader 4 terminal. The question is often asked how to set a take profit in the Quik terminal, let's say, we won't see much difference here - the general principle of setting will be similar. Suppose we have opened a small sell trade on EURUSD and we want to set take profit for it. We can see this both on the price chart and in the "Terminal" tab.
Place an order for a sell deal. Example.
Hover over the selected deal in the "Terminal" tab with the mouse and press the right button.
In the window that appears, look for the item "Modify or delete order".
Click it and go to step 2.
Step 2
We place take profit directly. To do this, we need the right block with the blue button. Take Profit can be set in three different ways:
By setting a certain level in points from the current price, where the take profit will be placed.
By choosing the proposed minimum take profit from the current price.
By yourself setting the quote for the desired profit level.
Step 3
Suppose we chose the first option and set the take profit level 20 pips below the current price. What will happen?
After clicking on the change button, we will receive a take profit set not from the trade opening quote, but from the price that the market is currently offering. That is, if your trade is already in the red by more than 20 points, then take profit will close the deal with a minus, and not with a plus, as we expect. Therefore, be careful.
How to set take profit at 20 pips from the price?
Therefore, it is better to always use self-entry of the take profit price, as shown in the following figure. This will increase control over the situation. As a result, we set the take profit 20 points below the trade opening price.
How to set take profit 20 pips from the opening price?
Step 4
After clicking on the change button, the take profit will be set. You will be prompted to print information about this event as a memory. If you keep a trader's diary, it will even be convenient.
Print order to set take profit
In addition, the fact of setting a take profit will be displayed both on the chart and in our deal. Congratulations!
So we have set take profit.
HOW TO CANCEL AN INSTALLED TAKE PROFIT?
If you suddenly made a mistake with the price or simply no longer want to use take profit, you can easily delete it. For this:
Hover the mouse over the take profit line.
Press the right mouse button.
Find the item "Cancel Take Profit" and click it.
HOW TO TRACK TAKE PROFIT IN METATRADER4?
The result of your open trade, which has a take profit set, is easy to track. As soon as the price approaches the moment of closing the order with the set profit, the corresponding take profit price field turns green. At this point, you can start to actively monitor the market in order, if necessary, to close the order manually if in doubt that the price will reach your level.
The order is close to closing by take profit
If everything goes according to a previously thought out scenario, then the deal will close itself with a profit, like ours. And this result will be displayed in the "History of deals" field - a green square will appear in the line of the closed deal, highlighting the take profit price.
The deal was closed by take profit
I would like to add that often traders replace take profit with a similar trailing stop order. In some cases, this is perfectly reasonable.
Stop Loss and Take Profit are the main means of position management. Whoever says what, but the only thing we are able to control in the market is the entry point and the amount of risk. To find the point of entry into the market, the trader uses a trading strategy, and to control the amount of risk, stop loss.
What is stop loss
As I said, a trader needs a stop loss to limit possible losses if the price goes not in his direction. Its size is the amount that you are willing to risk for the sake of probable profit. Let's take an example. Let's say you bought 5 lots of any currency pair, in order to close it, you need to sell these five lots. You have two exits: sell 5 lots at a take profit (that is, when the price is above your entry point), or at a stop loss at a loss (when the price is below your entry point). Stop loss is an essential element in the trading process of every intelligent trader. Without a stop loss, loss control becomes practically impossible.
How to set stop loss
For long and short positions, stop losses are placed in opposite directions from the entry point. For example, let's say that you bought 10 shares at a price of 50 rubles, in which case the stop loss will need to be set below the entry point (50 rubles), let's say at the level of 45 rubles. In the event of an unfavorable scenario, when the price reaches the level of 45 rubles, a market sell order will be placed.
And if you sell, for example, the same 10 shares at a price of 50 rubles, the stop loss will need to be set above the market entry point. For example, let it be the price of 55 rubles per share. In the event that the price moves against you and reaches the 55p mark, a stop loss will be triggered and a market buy order will be automatically placed at this price.
How to set a stop loss in a quick (QUIK)
In order to set a stop loss, in the QUIK terminal, you need to click on the icon in the form of raised fingers with the letter S.
Stop Loss and Take Profit what is it
Stop Loss and Take Profit what it is After that, a window will appear in which you will need to set the parameters of the stop loss execution. The most important thing is to indicate the price and the number of contracts. In the box number (lot), you need to put the number of lots or contracts for which you opened a position. Next, we indicate the condition for activating the order. As I explained in detail above: if you have a long position (you bought assets), then you need to select the "Sell" item.
And in the event that you shorted before that (sold without coverage), then you need to select the purchase item. After that, select the price, upon reaching which the stop loss will be triggered. Again, if you are in a long position, then the price must be quoted below the entry price. If you are in a short position (Short), then we set the price below the entry point. Having indicated the price of triggering the stop loss, you must also indicate the price at which the order will be placed. Look here at your own discretion, but in my opinion, it is best to select the "At market price" item as it is the safest.
How to set stop loss in MT4
First, you need to open the window for placing orders by clicking "New order" in the top menu. Then, in the window that appears, set the stop loss in the Stop Loss field at a distance from the market entry. When choosing its size, you need to proceed from the rules of the trading strategy and risk management.
How to move stop loss
In general, it is not recommended to do this, especially for beginners, as it can negatively affect trading results due to violation of the rules of risk management and the trading system. But, there are times when it is necessary to do this. Moving the stop loss is very simple, you need to move the mouse over the line of which the stop loss location is marked on the chart, hold down the left mouse button and drag the stop in the desired direction.
How to enter a position using a stop loss
Most traders know that it is necessary to set stop losses in order to play profitably on Forex, but not all of them use them. In addition, you should understand the reasons for their use, the main of which we will describe here. The main thing here is not to mix it up: if you open a buy trade, then the stop loss must be placed below the entry point, and if you open a sell trade, then the stop loss is set above the entry point.
Trailing stop
One of the very interesting types of stop loss. This type of stop loss is automatically pulled up following the price through a certain step. It is most often used for trending strategies, as it allows you to squeeze the maximum out of the movement. Among the downsides is the fact that such a stop loss can often knock out random market noise. Therefore, some traders exit the position in parts. That is, only part of the position is closed using the trailing stop.
Correct attitude to stop loss
Stop losses allow you to keep your losses under control
Stop loss makes it possible to control the amount of loss in each individual transaction, and also excludes the loss of the entire deposit. Controlling losses allows the trader to ultimately make a profit, since the ruble saved equals the ruble earned. So if you want to gain a foothold in this business, you need to pay special attention to loss control, that is, to be able to effectively use stop losses.
Before entering a trade and placing a stop loss, it is very important to understand that the size of your stop is the amount that you do not mind losing in the market. You must be mentally prepared for the fact that the stop loss will work and this should not affect your emotional balance in any way. Hope for the best, but prepare for the worst.
Stop losses relieve emotional stress
There is no need to worry about the safety of the deposit if you opened a position with a stop loss. After that, you can even forget about the trading terminal for a while, and not sit constantly at the monitor and watch the floating profit or loss. A stop order is your consent to a possible loss, because everything that you were able to do, you have already done. All that remains is to wait for the financial result.
Stop losses show that the analysis of the market situation was not carried out correctly
A triggered stop loss is an indicator that your forecast or analysis turned out to be wrong, because the situation is not developing as you expected. You do not need to make an operation in the direction in which a losing trade was made. Stop loss showed that your forecast does not coincide with the market trend and you should change your mind about the situation as quickly as possible in order to be able to receive income.
Stop losses allow you to enter the market at a more profitable quote
When entering a trade, you need to focus on the size of the stop loss, and not on the amount of possible profit. A stop order should be placed at a logical level, so that when it is triggered, it is unambiguous to understand that the analysis of the situation in the foreign exchange market turned out to be incorrect. You need to open a position at the lowest price so that the stop loss is small. Therefore, when making a deal, you need to take into account the stop loss level. When it turns out to be large and does not meet the requirements of your risk management and money management, then you should abandon this transaction and wait for the next good trading signal.
Take Profit what is it
If stop loss is needed to fix losses, then take profit is needed to fix profits. Take profit is an order to close a position with a profit, if the price moves in the direction chosen by the trader. The potential profitability of the deal depends on the size of the take profit.
How to set take profit
Take profit is set in a mirror image relative to stop loss. If you have opened a buy trade, then take profit should be set above the market entry point. If you have a sell trade open, then take profit should be placed below the entry point.
How to set take profit in Quick (QUIK)
In the terminal, quick take profit can be done in two ways:
By pre-configuring the possibility of quick installation and withdrawal of an order through the glass
And directly on the chart
How to set take profit in MT4
This is done in the same window. Only in the place of the stop loss setting field you need to correct the take profit setting field. An even easier way to set both stop loss and take profit is to pull the line marking the entry point to the market after the order is executed. If you made a buy deal, then by pulling the line up, you will get a take profit, and by pulling down the stop loss. For a sell trade, the opposite is true.
Stop Loss and Take Profit Ratio
Stop Loss and Take Profit what is it | Instruction | Full parsing
For different strategies, a different ratio of stop loss to take profit is suitable. The main variations are shown in the figure below.
1 to 3 ratio
This ratio of take profit and stop loss is suitable for trend strategies. In this case, you will be "catching" stop losses more often, but if you take a take, you will beat off 3 stops at once. It turns out that in order for the strategy to be profitable, you need to have 30 profitable trades out of 100.
1 to 2 ratio
Stop losses will be triggered less often, but accordingly, the profit in case of a successful trade will be lower. The minimum number of profitable trades for a given stop loss to take ratio is 40 out of 100.
1 to 1 ratio
In this case, in order to obtain a positive mathematical expectation, you need to have even an extremely small margin in positive trades, if the number of positive trades is 55 out of 100, then you will already earn. (don't forget about the commission)
2 to 1 ratio
In theory, the take should be triggered even more often than the stop. By itself, the advantage in positive trades will be greater, but it is worth remembering that if the stop loss is triggered, you will get a double loss. With this ratio, 60 trades out of 100 should be profitable.
In English, the sound does not change: Stop Loss - as it is written, so it is read. If we translate, we get “stop loss”. Indeed, Stop Losses are used to sell financial instruments for which our forecasts did not come true, and the deals went into negative territory. In the jargon of traders, you can hear the names like "Stop" or "Elk", you know now, the common phrase "I caught a moose!" speaks more of an unsuccessful hunt than a big catch.
Forex, as you and I know, works around the clock, but this does not mean that we constantly sit at the monitor and pray to the charts. If we move away from the computer, leaving open trades, we risk not being able to return in time - sudden news or a large player will turn the market, and our deposit will turn to zero.
However, if we set Stop Loss at a certain level, the broker will automatically close our trade position, even if we ourselves do not do it manually, as soon as the price touches it. Thus, Stop Loss allows you to open a trade, determine the maximum possible loss, protect yourself from deeper drawdowns and "disconnect" from trading, going about your business.
A trade order opposite to Stop Loss is called “Take Profit”. It no longer fixes losses, but the trader's profit. If the currency moves in the right direction, profit is constantly displayed in the terminal window, but we are not at the computer, the broker will automatically close the deal as soon as the rate reaches a certain value.
Consider the difference in the US dollar against the ruble. Let's say on the 4th of October we bought American currency at a price of 61 rubles. for $ 1.
US dollar deal
We have set Take Profit at 78.796 and Stop Loss at 47.875. Thus, if the price rises to 78.796, and we are not at the computer, the broker will automatically close our deal, the profit will be 17.796 rubles per dollar. In fact, of course, there will be at least 1,000 times more.
If our forecasts do not come true, and the market collapses down, at the level of 47.875 rubles, the position will be automatically closed by Stop Loss. If the recession continues, we will not lose money on it, we will protect the rest of the deposit. Possible loss with this strategy - 13.125 rubles. with $ 1, the profit is 1.35 times the Stop (we will return to this ratio later).
Fortunately, the dollar was going up, the position would have closed with a plus.
How to install them correctly - 3 possible ways
We talked about three ways to install them earlier in the article "Overview of the main functions of the MetaTrader trading terminal", so we will briefly mention them. First, let's define the types of trading positions.
Transactions in the foreign exchange market are divided into two large groups:
Positions to buy currency (Buy) - we expect prices to go up, the rate will strengthen, we buy cheaper in order to sell it at a higher price. Their other name is "Long", long positions. Practice shows that the market goes up much slower than down (“long” in English means “long”, “long” - you have to sit and wait for a long time), because the dominant emotion in the market crowd is enrichment, capital increase.
Positions for selling currency (Sell) - we expect that prices will go down, the rate will weaken. To buy at a higher price in order to sell at a lower price is absurd, of course, everything is a little different. If the dollar rises in value, then the ruble falls. If we think that the dollar will fall, then we buy the ruble, which will rise in price on the fall of the dollar, and we will sell it at a higher price, with a benefit for ourselves (but, in order not to bother with all this, we kind of open a deal to sell the dollar in the terminal). Another name - "Short" or short position ("short" in English means "short", you will not have to wait long). The reason is that the market usually falls much faster than it grows, because the crowd is seized by fear, anxiety about their money, traders are in a hurry to sell assets, get rid of them. The result is that the currency is falling down like an avalanche.
Now, what does the type of position have to do with Stop Loss and Take Profit? Beginners sometimes confuse seemingly elementary things. If we open a long position, that is, for a price increase, Stop Loss will be below the open price, and Take Profit will be above it. For if the price falls, we will lose money, and if it rises, we will earn.
When I was learning to trade, my first teacher said: "The size of the profit should be at least twice the potential loss, then we will trade either with a plus or with a zero." Another trader later convinced of the opposite: “There are trades with a potential return of 2, 3, 10 times the risk, but ideally, there are not so many such profitable trades. If Take Profit exceeds Stop Loss by 20% - it's already good, you can open a trading position. "
Concluding the conversation about setting SL and TP, I will touch on scalping - short-term trading strategies in which the trader catches the slightest price movements. Scalping attracts the attention of a huge number of people, it is praised everywhere, but is this really the case?
Indeed, the wealthiest traders are scalpers. However, to achieve high professionalism, you need to trade for more than one year, to understand the principles of market movement. In each trade, the scalper receives a very small profit in relation to the possible loss. So the main drawback of strategies of this type is the risk of losing all profits traded during the day (dozens of trades!) In one unsuccessful position. Think not only about money, but also about nerves.
I had a chance to somehow familiarize myself with scalping strategies from Marat Gazizov (a trader-teacher at Alpari) - we will definitely analyze them, because the thing is very worthwhile, the Stops there are much more democratic than usual.
Just 5 times more profit using floating stops or Trailing Stop order?
If you have already tried to open trades in the trading terminal and the price was moving in your direction, you probably wondered: “What if I don’t close the trade now, I don’t pull up the Stop Loss, the market will reverse and I will cure with a big loss?” Let's consider this problem.
In most cases, you cannot move the Stop and Profit levels. This is a violation of the trading plan. Return to trend trading - if I were to lower the Stop Loss level, I would be constantly carried away, because the market did not reach the target and rolled back to the upper border of the channel.
Therefore, the moral is to open a deal, place Stops and wait. We move them only in accordance with the strategy, if it requires it.
However, there are sometimes interesting situations in the market - prices go down or up powerfully. Your trades are closed with a plus, but judging by the traffic intensity, you could take a few more points. How to be?
Here we are helped by the floating or sliding Stop Loss, its name in English is Trailing Stop. What is the principle? Trailing Stop moves Stop Loss following the price. This does not mean that the Stop is constantly twitching, like the price: the movement occurs after the rate has changed by a certain number of points. The stop goes up / down depending on the deal (Buy or Sell), it is not returned under any circumstances.
It is advisable to set Stop Loss manually before enabling Trailing Stop. In case the lights are turned off or another force majeure situation arises. Will the issued protective order in any way interfere with the work of the floating? No, absolutely not. If the Trailing Stop step is 15 points, then after this distance by the price, your Stop will automatically move to breakeven.
Manual stops are also needed because floating stops are set only when the trade is profitable. If we have opened a long position and the price has gone up, the stops will successfully start moving behind it. What if the market decided not to go up? If the rate does not rise from the open price by the number of points required to set Stop Loss, a protective order will not be placed. And if the market then collapses downward, there will be no protective order, you will lose a very large amount.
If the Trailing Stop worked for some time and moved the SL level, then when the terminal is turned off, the last “protection” level will remain in working condition. If, in your absence, the price drops to it, the deal will be successfully closed, you will remain in positive territory.
If the Trailing Stop has set SL, and you want to remove it, you need to disable the trailing process. For no matter how many times you click “Cancel Stop Loss” (this option is provided if you right-click on the SL), in a second it will intrusively return to its original position.
Supplement about using Trailing Stop. It helps a lot not only when “exceeding market expectations”, but also when trading on the news. During the news release, prices are sharply rushing up. For successful trades, it is better not to set Take Profit, but to use the Trailing Stop in order to squeeze the maximum profit out of the movement.
Naturally, it is necessary to set not a 15-point distance from the price, but a more serious one, because the market still does rollbacks (not in several candles, as usual, but simply in the process of forming one candle: sharply up, then down by a few points, then even higher than before, and so on).
Is a trade always closed by Stop Loss or Take Profit?
No not always. There are three reasons why a trade can close earlier or later than necessary, the trader either receives less profit or suffers a larger loss.
The first reason is slippage. In a separate article we will talk about why they arise and what they are all about. Now it is enough for you to know that slippage is a breakthrough of the rate by several points at once. For example, you wanted to sell the dollar at the rate of 60.00 rubles, you placed any trade order (Stop Loss, Take Profit or a pending order). The price was 59.98, and then the market immediately jumped to 60.02. Thus, there was no price of 60.00, the trade order will be executed at 60.02.
Now it seems to you that this is insignificant, in most cases, it is so. But, if important news comes out on the market, slippage can be very large, if you enter a trade with a large volume, the difference will no longer seem frivolous.
The second reason is gaps. In a separate article, we will not only give them a simple and understandable definition, but also learn how to trade on different types of gaps. For now, for the sake of simplicity, remember this: gaps are price gaps that occur when the market is closed. In Forex, they are observed after weekends or holidays, in the stock market - every day.
If no major events happened over the weekend, prices will not deviate much from previous values, otherwise the gap could be huge. For example, last weekend in France, the first round of presidential elections took place, all currency pairs with the euro and many others opened with a gap on Monday.
The gap after the weekend
As in the case of slippage, there seems to be no price gap between the extreme prices, so the broker is not able to execute a trade order. If on Monday after the day off the price is behind the Stop Loss level (lower for a long trade and higher for a "short" trade), the position will be closed exactly by this level. The result - you planned to lose one amount, and you will lose another, larger one.
On the forums there are often messages like "I lost 30% of my money on Monday because of the gap!" Be careful when leaving open trades for the weekend, read the separate article on gaps to learn how to defend against them.
The third reason is Stop Out. If you overloaded the deposit, and the market went against you and consumed most of the capital (usually 75 - 80 percent), the broker will automatically close all transactions, wait for the execution of Stop Loss or, moreover, Take Profit, it will not. In order to prevent Stop Out, it is necessary to set a protective order in all transactions and remember about the rules of money management (we will talk about this later).
Novice traders often trade without Stop Loss. When they are "reasoned", they are sure to complain about the decline in profits. Yes, the market periodically reverses, so trading with a Stop seems less profitable, but sooner or later one trade appears, on which there is no reversal, all the money is consumed.
In conclusion, I will give you another good example. Let's say you opened an unsuccessful EUR / USD trade in September 2003. You thought prices would go down, but they turned back. Has the price returned to its last harbor?
Market cyclicality
Yes, only now it took her 12 years to return. Would you agree to wait, assuming that the market will not take you out with a Stop Out?
So, first, a little theory. In most trading systems, the effect of take profit is approximately the same - at a certain point in time, the price reaches the required level and a limited or market order is sent to the market to close a position with a profit. An important point that many people miss or do not know is that the take profit target is fulfilled at the moment of placing a market or limit order, and not closing the position. Therefore, when the position is not closed, and the system tells us that the take profit has been executed, this does not mean at all that "the stop has not worked", but almost always means only one thing: you placed the order incorrectly!
So, let's learn how to set take profit correctly.
How to set and use Take Profit correctly
For example, let's take a certain asset that we bought, for example, for 100 rubles and wanted to fix the profit at the level not below a certain level.
So how do you implement this in Quick?
The first way to correctly set take profit.
This method is suitable for those who work with price levels (bounce / breakout).
First, we need to determine what price level on the chart will be the first technical target (it is foolish to set unrealistic or almost unattainable targets, although there are surprises in the market). For example, we have determined that this is the level of 120 rubles. In the right field, indicate the condition for activating the order - sale, if the price> = 120.
The second point is to determine the offset from the maximum. The offset from the maximum is a kind of trigger. It can be set as a percentage or in the price currency. Let it be 2 rubles in our example. That is, until the price reaches 120 rubles, this function will be inactive. As soon as the price is not lower than 120, the take profit order will calculate each subsequent maximum and a correction from it. When the price corrects from one of the maximums by the value No less than the amount of indentation ( No less than - this is an important condition that many people miss, those. could be much more) the order to close the position will go to the market.
The third point is the protective spread. It makes sense to set a value other than zero to avoid slippage. The general recommendation is that the larger the spread, the less chance of slippage and the higher the chance of closing the position. We will set 1 ruble in our example.
The second way to correctly set take profit.
It will differ from the first one only in that you define for yourself the level not below which you would like to close the position. Let it be 117 rubles. Knowing the parameters of the offset from the maximum and the protective spread from the previous example, it is easy to calculate the price of the order activation condition: 117 + 2 + 1 = 120 rubles. Otherwise, there are no differences.
Now we will consider 3 options for the development of events.
1. The price reached 120 rubles and did not go higher. There was a correction from 120 rubles to 2 rubles. Our take profit generated a limited sell order at a price of 117 rubles (120 - 2 - 1 = 117). There was a sale at prices ranging from 118 to 117 rubles.
2. The price has reached 120 rubles and, without correcting by 2 or more rubles, went higher - up to 129 rubles. From 129 rubles, there was a correction by 2 rubles - up to 127, and a limited order to sell at 126 rubles (129 - 2 - 1) went to the market. The order was executed in the range from 127 to 126 rubles. This example clearly shows the take profit opportunities to increase the profitability potential of operations.
3. The market closed at 119 rubles. The next day, the first transaction took place at a price of 122 rubles. The second trade is at 115. Our take profit is activated on the second trade, and a sell order at 114 rubles is sent to the market.
One of the most important points in trading in the stock market is to correctly place an order to buy or sell shares. It would seem that it is difficult here. In fact, QUIK ITS has a number of different applications that will help you implement your strategies.
In addition to simple orders, ITS QUIK has a number of more complex orders that help to implement a specific algorithm for opening and closing positions. Such orders include stop orders, the essence of which is that they contain a certain condition, upon fulfillment of which a simple limit order is placed on the market.
Stop orders are of the following types:
Stop Limit;
Stop with linked;
Take profit;
Stop on execution;
Take profit by execution;
Stop price for another security;
Take profit and stop limit;
Take profit and stop limit on execution.
A stop-order "hangs" on the broker's server (and not on the exchange), and its life is not limited to one trading session. In particular, when placing a stop order, you can select the item "until canceled", that is, your order will wait until the condition is fulfilled or until you cancel it yourself. This feature allows you to develop various combinations that allow you to automate trading, and eliminates the need to monitor the course of trading on a computer monitor in the “non-stop” mode.
We have reviewed the stop-limit and stop-limit with tied orders. Also one of the most popular orders is the take-profit order.
It is worth clarifying here that there is a concept in exchange trading - Take Profit(lit. Take profit), which means placing any order closing the deal above the current price (if Long is open) in order to fix the profit. In this case, it would be incorrect to identify the name of the order with the above-described trading action. .
Stop order of the type " Take profit »Implements the trailing stop principle in Quik. This principle is not to set a predetermined price target when closing a position with a profit, but to close it by moving a stop order to close a position, which is set at some distance from the local extremum reached by the price and moves as this extremum increases.
The size of the "bounce" from the extremum (from max with Long; from min with Short) can be set both in percent and in absolute values.
For example, you have a public Long. By placing a take-profit order, you set the size of your Stop Loss. Suppose a close order has been placed if the price falls by 3% from the high. The price has reached 100 rubles per share - your Stop has pulled up to the level of 97 rubles. If the price goes down, Stop stays in place and will be triggered if the price reaches the level of 97. If the price goes further up, stop automatically, without your intervention, "pulls up" higher. And so on ad infinitum - until the application works or is canceled (unless otherwise indicated in the "validity period" column).
This method is useful when a significant trend is expected, the ultimate goal of which is difficult to determine in advance. You only limit the size of the local correction (rollback in the opposite direction from the extreme); if this size is exceeded, you consider the trend to be over.
The window for entering stop orders can be called in many ways.:
1) click on the icon in the toolbar;
2) by calling the context menu (right mouse button) from the order book;
3) by calling the context menu from the name of the paper in Current parameter table
;
4) by double-clicking the left mouse button in the window Stop orders table
;
5) by calling the context menu from Stop order tables
;
6) by calling the context menu from Tables of securities limits
(on the line of the corresponding paper);
7) with the function key F6.