Placing Take-profit target from higher time-frame

Placing Take-profit target from higher time-frame

This trading algorithm is based on the idea that higher time frames provide a more accurate picture of the overall trend, while lower time frames can be used to identify more precise entry and exit points.

How it works | Placing Take-profit target from higher time-frame, but place stop-loss targets from lower timeframe

  1. How it works Placing Take-profit target from higher time-frame - IDENTIFY
    Identify the trend direction on a higher time frame, such as the daily or weekly chart.
  2. How it works Placing Take-profit target from higher time-frame - ENTER
    Enter a trade in the direction of the trend on a lower time frame, such as the hourly or 15-minute chart.
  3. How it works Placing Take-profit target from higher time-frame - PLACE
    Place a take-profit target on the higher time frame, at a level that is consistent with the overall trend.
  4. How it works Placing Take-profit target from higher time-frame - PLACE STOP
    Place a stop-loss target on the lower time frame, below the most recent swing low.

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Example

Suppose you are trading the EUR/USD currency pair and you have identified a bullish trend on the daily chart.

You decide to enter a long trade on the hourly chart, at a price of 1.1000. You place a take-profit target on the daily chart, at a level of 1.1100, and a stop-loss target on the hourly chart, at a price of 1.0950.

If the market continues to move in your favor, your take-profit target on the daily chart will be hit, and you will exit the trade with a profit of 100 pips.

However, if the market moves against you and your stop-loss target on the hourly chart is hit, you will exit the trade with a loss of 50 pips.

Pros: | Placing Take-profit target from higher time-frame, but place stop-loss targets from lower timeframe

  1. This algorithm can help you to avoid getting stopped out of trades prematurely.
  2. It can also help you to capture larger profits, as you are targeting the overall trend.

Cons­čśÉ Placing Take-profit target from higher time-frame, but place stop-loss targets from lower timeframe

  1. This algorithm can require a lot of patience, as you may have to wait for your take-profit target to be hit on the higher time frame.
  2. It can also be risky, as you are placing your stop-loss target on a lower time frame, where price volatility is higher.

Overall, this trading algorithm can be a useful tool for traders who are looking to capture larger profits while minimizing their risk. However, it is important to use it carefully and to be aware of the potential risks involved.

Additional considerations

  • When choosing a take-profit target on the higher time frame, it is important to consider the overall trend and the key support and resistance levels.
  • When choosing a stop-loss target on the lower time frame, it is important to consider the most recent swing low and the current price action.
  • It is also important to use a risk management strategy to protect your capital. For example, you may want to risk no more than 1% of your capital on any one trade.

It is also important to note that no trading algorithm is perfect. There will always be times when the market moves against you.

Therefore, it is important to use this algorithm in conjunction with other trading tools and strategies


POSTED IN: Online Trading for Beginners