Setting a target for stock trade

How to improve your stock market strategies

You already have your entry and stop-loss point . These values give you setup info that you must compare with your risk/reward ratio to decide if such a trade setup is good or not.

A profit target can be found by these two techniques:

1. fixed price value
2. moving (trailing) stop value

This way, you set a profit target for stock trade as fixed price values. These values can be set by these techniques:

• The next important level of support or resistance
• The previous movement of price
• Chart patterns
• Retracements

The next important level of support or resistance is a very simple method, and you need only look at the chart to see them.

The previous movement of price value is used especially for pullback trades. You expect that the stock movement will be as strong as the last similar movement before pullback. You can see an example on this chart:

Here’s one of my stock market trading tipsfor setting fixed profit values:

Combine methods.
It’s better to confirm your target by two or more methods.

Moving (trailing) stop value

In this scenario you need not set a fixed value where you will take profits. You’re simply waiting for trade to go through your stop level. This stop level could be a previously defined stop loss level, but as trade develops you’ll want to move this level in your favor. That means that after some time when you use the techniques of trade management, your stop value will already be above the entry point. Such a trade will finish as a profit.

A trailing stop value can be set below the last support or above the last resistance in trend move. Moving averages are also used very often as a moving value of support or resistance. A trailing stop level can be set near them.

Here’s an example of setting a trailing stop value during a stock uptrend :

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