How to Determine Profit Target Numbers in Forex Trading
Before trading, traders should make a profit target that they want to get. The profit target to be obtained must be realistic. If you want big profits, you need big capital. If traders do not have capital then the risk will be increased. It should be remembered for all traders that increasing this risk must have extra skills. If you only have mediocre skills, you increase the risk that you will potentially become a victim or run out in the middle of the road because of the high potential risk. Here's how to set a target profit figure in forex trading:
Using the 2 Percent Method
By using this 2 percent method, traders can determine a certain percentage of capital to be traded. For example, a trader has a balance of 100 USD, so the trader will open a position with a volume of 2 USD at a time. If the trader manages to make a profit, the trading position will be immediately closed, so that the profit earned will be accumulated little by little.
Using PIP
As traders know, pip stands for price interest point. In short, a pip is a unit used to measure changes in the exchange rate between two currencies. Determining the profit target using pips is arguably the simplest way. Here the trader simply determines how many pips he wants to earn.
Risk/Reward Ratio
Risk/reward is a method often used by day traders. Traders can also do this by determining the target profit and loss risk in a balanced way. However, this strategy will only be effective if the trader can be disciplined to follow the rules that have been determined from the start.
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