2 TARGETS EXPLAINED - POSITION SIZING - BANKING PROFITS
Hi All, I recently have been asked to publish this diagram for executing a 2 target order.
I have labeled the diagram with order sequence in a perfect world scenario. Steps below relate to numbers on chart
I am not telling you this is how everyone does it and this is only based on the questions I have been asked, every strategy has its own order entries stops and targets.
1. Price action comes down to hit your Limit Order Entry/Entries - when we find the reason for entry in this case we have identified this as an advanced pattern. When price action has at least past the B leg and we anticipate that price will continue downwards towards our D completion and predict where the Market is most likely to go after this, we then decide on our entry type and execute the order - The most important thing is to know where your entry stops and targets go before the entry level is reached. We mark these area's out and place 2 Order Entries @ Half position size.
So let's say you would like to buy 20k EURUSD and the spread was 2.3 pips with a pip cost of $1 per 10k (minilot) trade. The cost would be:
2.3 pips * $1 per minilot * 2 minilots = $4.60
Now let's say you bought 20k in EURUSD, but this time, you bought two separate minilots, 10k and 10k. The cost for this would be
Position #1 - 2.3 pips * $1 per minilot * 1 minilot = $2.30
Position #2 - 2.3 pips * $1 per minilot * 1 minilot = $2.30
The 2nd scenario costs the same as the 1st but allows two different sets of stops and limits (one set per ticket).
So now we have the Order in Place with your target 1 and 2 and only exposing you to a stop loss of your original 20k
After D has completed you need to make sure to bring your targets down until D has completed.
2. Now you have your order filled, based on historical data and forward testing results in the most likely of places price will retrace to being the 38.2% for T1 and 61.8% for T2 - now in your testing results you may just take one position and use the 50.0% for your one target. Keep in mind this is just an example. We have already banked our target 1 with 43pips - Price can do 3 things Go up Sideways or down. We hope price would just continue to hit our T2 - in this case price will retrace when sellers have their orders in at the 38.2%
3. We then move our stops up for position 2 to break even.
4. Price action usually will retrace and can indeed come back down to stop you out for a break even trade on position 2 but this has already banked 43 pips at 10k Half Position.
5. Price action doesn't stop us out and we are looking for Target 2 to be acquired, when T2 is obtained we have completed a perfect trade. And target 2 has banked 69 pips
You can also trail a stop when the price action hits T1 if you need to sleep or leave for some reason and don't want to leave the position exposed to loss if it turns in the wrong direction. You can take step number 4 after the retrace and use the LLLC candle wick and trail the stop 5 pips below or above the HHHC candle wick depending on bearish or bullish.
Note: some brokers or platforms do have the feature to have two limits on the one order.
Also note the dollar figure is great that's what we all want is to make money in the market, the most important thing though is to not go broke, protect capital, dont expose yourself to too much risk, bank profits and don't be greedy. Being a consistently profitable trader putting yourself in the highest probable trades, Like Warren Buffett Says The stock market is a device of transferring money from the impatient to the patient.
Their are a million ways to make and lose money in Forex - good luck
I hope this helps for all those who asked to post it
I have labeled the diagram with order sequence in a perfect world scenario. Steps below relate to numbers on chart
I am not telling you this is how everyone does it and this is only based on the questions I have been asked, every strategy has its own order entries stops and targets.
1. Price action comes down to hit your Limit Order Entry/Entries - when we find the reason for entry in this case we have identified this as an advanced pattern. When price action has at least past the B leg and we anticipate that price will continue downwards towards our D completion and predict where the Market is most likely to go after this, we then decide on our entry type and execute the order - The most important thing is to know where your entry stops and targets go before the entry level is reached. We mark these area's out and place 2 Order Entries @ Half position size.
So let's say you would like to buy 20k EURUSD and the spread was 2.3 pips with a pip cost of $1 per 10k (minilot) trade. The cost would be:
2.3 pips * $1 per minilot * 2 minilots = $4.60
Now let's say you bought 20k in EURUSD, but this time, you bought two separate minilots, 10k and 10k. The cost for this would be
Position #1 - 2.3 pips * $1 per minilot * 1 minilot = $2.30
Position #2 - 2.3 pips * $1 per minilot * 1 minilot = $2.30
The 2nd scenario costs the same as the 1st but allows two different sets of stops and limits (one set per ticket).
So now we have the Order in Place with your target 1 and 2 and only exposing you to a stop loss of your original 20k
After D has completed you need to make sure to bring your targets down until D has completed.
2. Now you have your order filled, based on historical data and forward testing results in the most likely of places price will retrace to being the 38.2% for T1 and 61.8% for T2 - now in your testing results you may just take one position and use the 50.0% for your one target. Keep in mind this is just an example. We have already banked our target 1 with 43pips - Price can do 3 things Go up Sideways or down. We hope price would just continue to hit our T2 - in this case price will retrace when sellers have their orders in at the 38.2%
3. We then move our stops up for position 2 to break even.
4. Price action usually will retrace and can indeed come back down to stop you out for a break even trade on position 2 but this has already banked 43 pips at 10k Half Position.
5. Price action doesn't stop us out and we are looking for Target 2 to be acquired, when T2 is obtained we have completed a perfect trade. And target 2 has banked 69 pips
You can also trail a stop when the price action hits T1 if you need to sleep or leave for some reason and don't want to leave the position exposed to loss if it turns in the wrong direction. You can take step number 4 after the retrace and use the LLLC candle wick and trail the stop 5 pips below or above the HHHC candle wick depending on bearish or bullish.
Note: some brokers or platforms do have the feature to have two limits on the one order.
Also note the dollar figure is great that's what we all want is to make money in the market, the most important thing though is to not go broke, protect capital, dont expose yourself to too much risk, bank profits and don't be greedy. Being a consistently profitable trader putting yourself in the highest probable trades, Like Warren Buffett Says The stock market is a device of transferring money from the impatient to the patient.
Their are a million ways to make and lose money in Forex - good luck
I hope this helps for all those who asked to post it
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