There are many ways to take profits when trading, in fact, it all depends on the style of trading you do, some are based on fundamental news and others are based more on technical analysis.
Some use indicators to determine the price of the stop loss and others use only the price action or patterns created with support and resistance.
Here I will teach you how to do it in the easiest way possible so that you know when to take profits and close the operation with profits.
If you want to know how to know when to stop the operation, you can read my article where I talk about how to do it, I will leave it at the end.
ATR indicator:
It is an indicator that measures the volatility of an asset, which will tell us that there will be days where we can take more profits or fewer profits, there will be days where our benefits will be greater than our risks, and others where our risks will be greater.
How to calculate it?
You simply open the official page of tradingVew and in the indicator box you place Atr, I use one called Atr stop loss, and we select it.
There are some manual ATRs where we must get the price and others where they already tell us.
Since there are a lot of indicators with that name, I'll show you how to do it manually.
Take Profit:
The Take Profit is a tool of the platforms of the future where we will only have to place the price where we want our operation to be closed with profits automatically.
It is advisable to use Take Profit, to save time at the time of any unforeseen event, the platform closes, the platform crashes, there is an error on the platform, the electricity goes out, you ran out of internet, and your operation will be closed at the moment that the price touches the price that you placed the Take Profit, automatically.
Now, the formula to do it is very simple:
You are going to multiply the price of the Atr by 1 and the amount that it gives you is going to be added to the entry price of your operation.
Example:
You enter a Bitcoin operation at the price of 31541, then you are going to multiply by 1 the amount of volatility that bitcoin has in a range (455X1) and the result that it gives you is going to be added to the entry price, example:
31541X1ATR(455)=31996
And that's it, you already have the price where your operation will be closed automatically.
In this way, your trading style will be much more relaxed, and you will not have to spend all day waiting to close the operations.
It will also be more analyzed trading since you will not take profits by chance and above all, you will have an algorithm that will force you to be accountable, that is, you cannot close operations before touching the Take Profit unless the indicator stops marking the signal.
The same happens with the Stop loss, we cannot close the trades before touching those points.
At first, it is very annoying to lose when you can close, but it is better to lose with a strategy and then take advantage of the good streaks as it should and not do it just by luck.
That has been all for today, I hope you like this new article, I did it with the best intention of helping and sharing my knowledge with you.