Stop Losses and Take Profits

At the most basic level there are only four possible combinations:

Stop loss | Take Profit
1. No | No
2. Yes | No
3. No | Yes
4. Yes | Yes

I'd guess that most people choose option 2 or 4 when opening a trade. Is there anyone who would choose option 1 or 3?

I'm new to Forex so I'm interested in hearing arguments for and against the various options.

Hi!
To tell you the truth in my very first weeks of trading, I was actually not using SL which means I was aiming for No3. But No5 too, one could say, that means Margin Call.

Number 4 every time for me... Keeps things simple :-)

This explains why:
(well the stop loss bit, anyway...)

https://www.thistradinglife.com/post/trading-stop-loss

Yes, #3. Target with no Stop. However, that does not mean the trade goes unprotected merely because it has no Stop.

With Manual Trading, using a script that executes a Buy Reversal or Sell Reversal allows you to become the "Stop." You are the Stop in that scenario via HotKey that reverses the trade direction. But, in order to do this, you need to know whether there will be enough follow through in the opposite direction before HotKeying the reversal.

With Automated Trading, your algo is used to protect the opposite side - again with a Buy or Sell Reversal. And, once again, before doing this one must know whether the market contains enough follow through from the level where the reversal was executed via algo.

In this way, one could trade in either direction without assuming a Directional Bias in the market. This changes the nature of trading from Direction to Magnitude and shifts the burden on the Trader to locate Market Inflection Levels instead in Directional Bias.

it's better to use take profit and stoploss that's will make you avoid a lot of unnecessary troubles and useless strategies in the future ....
and by the way after many years let me tell you that argument about using stoploss or no is useless ....
you will find at the end there is a lot of things more important than that can make you profitable or no

YES it s right. and also I found that a stop loss when major news is coming will not guaranteed to work properly

I think both are very important for trading easily. I am choosing option 4. Because these make trading easy for the newbies like me.

#2

Reason is because you will learn how to place stops effectively. If you are getting stopped out all the time it means your stop is too tight, or you are not reading the market correctly.

Having a TP IMHO is not the smartest long term option since no one really knows how long a trade will run for. It's always good to have a plan but in my experience setting targets can take you out of a trade too early most of the time, and maybe if you are too greedy the price will not reach your target. Calculating SL is difficult enough so adding another even more difficult task of calculating targets is just making the job of trading harder.

This may sound like too much work but managing your positions and moving your stops manually is the best way in my opinion. React to the market and the new fresh highs and lows. Use that to your advantage. Most traders use a hard stop and hard tp and that is probably part of the reason most traders lose and miss the big moves. You can even trade with no sl but the problems with that are obvious so I won't go into detail here.

Watch the market and react to market structure. If you exit your position it should be because you truly believe that the market will go in the other direction, and if that's the case, if you were long, shouldn't you go short now? Maybe not but thinking this way will allow you to manage your positions more effectively. Maybe you want to exit to free up equity for a better opportunity? In any case there should always be thought put into EXITING a trade, and most people do not talk about this. If you put so much effort and analysis into entering a trade then why not put the same amount of effort into your exits?

So, yeah. Use a stop, but don't use a TP. Just make sure to manage your trade and always go for at least 1:1 unless you are absolutely sure you made a mistake and price wont go further. Another thing you can do is move stop to break even or even take a % of your position off one you are in profit. It all really depends.

option 2 and 4 remain the best option because at first you have to decide the amount you are investing on each pair with the aid of stoploss,but as for me I prefer option 4 because you can't tell how your tp will run

Well done newbie, you have the best answer here. Both are very important, a lot of people give attention on where to place the stops and dont realize that where they take profits is as important if not more important than where they place the stops