Setting a target for a stock tradeSetting a target for a stock trade is the last thing you must do to complete every stock trade setup. You need to know when to take profits from your trade. 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: You must also consider the time frame for your trade to know how long the trade can develop before reaching the defined profit value. Fixed price value This way, you set a profit target for a stock trade as fixed price values. These values can be set by these techniques:
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:
Chart patterns have the expected price movements in their definition. You can use them too. Retracement values (130%, 150%, 200%) help to set your profit point for trades that expect movement into uncharted territory. When a stock price moves into all-time highs, you can’t find an important new level of resistance, but you can use extensions of retracements.
Here’s one of my stock market trading tipsfor setting fixed profit values:
Combine methods. 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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