Day #2 How to Open Buy Trade For Profit?

Day 2

When do trader enter the market to open buy trade?

In Day #1, we have learned how to read the forex chart, and we can identify the 3 phases of the market namely: Up trend, Down trend and Sideway trend.

Most trader will enter buy trade using Upward trendlines and support/resistance lines as follow:

· Using the Upward trendline: enter buy trade after the price closed at, above or around the trendline.

· Using Support/Resistance lines: enter buy trade after the price closed at, above or around the support line.

How to open Buy trade to profit?

When a trader believe that the price of the currency is going to go up, he can open a buy trade to try to profit from the move. He will first buy the currency at a lower price and sell it at a higher price, thus profiting from the difference.

How can trader protect their open buy trade position?

For protection and to reduce trading risk, trader usually use a stop loss price to exit from the open buy trade. If the market turned against him and price move in the opposite direction and hit the stop loss price, the open buy position will be closed at the predetermine price, thus minimising the risk (refer to chart below).

Opening buy trade for profit:

Most trader when opening buy trade, usually also set a predetermine take profit price beside setting the stop loss price. When the trader is right in the direction of the trade, and when the currency price hit the predetermine take profit price, the open buy trade will be closed for a profit (refer to the chart below).

The take profit price is usually the price set at 2 times the risk. Meaning, if the trader is risking 50 basis points (stop losses) for the open trade, he will be looking for 2 times profit which is 100 basis points. This is to ensure that in the long run he will be profitable even if he is right for only 30% of the time! This is money management, if you are interested, you can research to find out more.

How to place open buy trade order?

Refer to the MT4 broker order panel above, input the correct currency pair, decide the trading lot size(volume), input the Entry price, Stop Loss Price and Take Profit Price, then choose “instant Execution”. Finally choose “Buy” to place the order. The order will be executed immediate at the current market price (refer to the chart above).

Summary:

Trader using predetermined stop loss and take profit price can “Set and Forget” the trade. The trader will either be right and be rewarded with the take profit; or if he is wrong, the trade will be closed at a loss. Thus. This strategy is very suitable for newbies and traders who don’t want to “monitor” the trade by constantly looking at the price (refer to the chart below).

Guys, that’s all for Day #2. I hope you have learned something here.

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Happy Investing!

Turtle Investing Team