TAKE PROFIT: setting profit targets
A profit target is a price level on a chart that you set to take profit.
Profit targets are the most important part of your trading. It is not your entries where you make a profit or loss, it is your exits. You need to be able to determine a suitable profit target for your trading – one that gives you a realistic profit target, but also gives you a sensible risk to reward.
Choosing a profit target is a key part of your trading strategy – it requires you work out in advance exactly how much risk you are prepared to take for how much potential reward.
Profit targets are actually the most important part of your strategy, because it is not your entries where you make a profit or loss, it is your exits. You need to be able to determine a suitable profit target for your trading – one that gives you a realistic profit target, but also gives you a sensible risk to reward.
There are countless ways in which you can set your profit target using technical indicators and other tools. We will show you two easy ways to set your profit target: support and resistance, and daily range levels using the ATR indicator.
USING SUPPORT AND RESISTANCE TO SET PROFIT TARGETS:
Support and resistance is a powerful concept used by traders to read and interpret price action. It is based on the theory that the price may struggle to break above certain resistance levels or below certain support levels. You can use this to determine profit levels.