Stop loss Profit target

[jenialyinvest]

If we don’t use stop loss or profit targets in our strategies will the exits be based on indicator values?

And is there any proof that stop loss or profit tsrget hunting exists in some forex brokers?

 

[Petko Aleksandrov]

Hello Jenialyinvest,

Yes, if you do not use SL and TP in the generator, the strategies will have exit conditions. You can quickly test that.

I am sure about the second question? Please, make it brighter.

[jenialyinvest]

Thanks for your answer, what I meant by the second question is: I read somewhere that brokers or even privileged traders can see where there is a concentration of stop losses and profit targets , and can move the market to hit those prices. Iam not sure is that possible??

[Petko Aleksandrov]

Oh, I get your point. Well, I can not say it with 100% certainty if something like that is possible. I never saw it with my eyes, honestly.

I have seen that brokers delay the execution of pending orders during the news—even a regulated broker.

But I guess if some broker does what you describe it will be a scammer. Because the regulated brokers take the prices from a couple of liquidy providers, and they take the average price. This is why most regulated brokers have very same prices.

I know that some of the worst scam brokers fake their prices to make their clients believe the TP was hit. This way, they ask them via phone to deposit more money.

 

 

[Simon]

On a side note, I have read that a common risk/reward ratio is 1:2, or profit target being twice the stop loss, but the results I get from the Reactor suggest that the reverse can be safer/more profitable – stop-loss being twice the take-profit.

That way, price is more likely to hit your TP before it hits your SL, and you can move on to the next opportunity.

When I see a chart that has a lot of open trades on it, I don’t like it when I see how many Stop-losses price has to move through to get to a Take-profit.

Conversely, it’s always good to see that price is going to hit a lot of TPs before any SLs get hit.

[Petko Aleksandrov]

Hey Simon,

I figured out that on the first day I used FSB Pro (EA Studio was not developed at that time).

This is why I mention this in most of my courses, so I will save time for the traders to try trading with 1:2 or even 1:3.

Anyway, I was never convinced in that story before the strategy builders. Just because it is more logical that the price will hit more often the TP if it is closer.

Anyway, the strategy builders give us the answer to HOW MUCH should be the SL bigger than the TP for each strategy. We can not do it otherwise. And we can not know it..

[Author]

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