While trading in stocks, Forex, or cryptocurrencies, don’t you worry about where to take profit when you have unrealized gains? Also, don’t you worry about where to stop the loss when you lose money? In this article, I write about when to settle by trading. It does not mean that you absolutely have to do this, but I would like you to consider it as one of the guidelines. I will talk with reference to GBP / JPY. By the way, this idea can be applied to everything called trading. In addition, it can be applied to both short-term trading and long-term trading.
Point 1: Last time’s highest price or last time’s lowest price
As a guideline for profit taking or stop-loss points, it may be reversed with the previous highest price and the previous lowest price as a guide. Please see the red frame in the chart below. It is a daily chart of GBP / JPY, January 2022. The highest price is 158 yen, which is the point that reached October 2021. After that, although it plunged once, it soared again in December 2021. It has reached 157.7 yen. However, since the beginning of 2022, it has turned around and has begun to decline. This is a good example of reversing around the highest price last time.
・ Using the chart in the above figure as an example, the latest highest price is 158 yen and the latest lowest price is 149 yen. One guideline is to settle at around 158 yen for buying and around 149 yen for selling. ・ Conversely, if you put in a sell entry at around 158 yen and a buy entry at around 149 yen, you may get a big profit
・ If you buy at 150 yen, the above chart has risen to 158 yen and 157.7 yen recently, so you will take profit around 158 yen. If it goes backwards, the loss will be cut off when the latest lowest price of 149 yen is broken. ・ If you put in the sale at 157 yen, the above chart has dropped to 149 yen recently, so you will take profit at 149 yen. If it goes backwards, the loss will be cut off when the latest maximum of 158 yen is exceeded. * However, it does not always reach the highest and lowest prices last time. It is wise to take profit in some places. It is realistic to settle at the points in the price range of the point 2 below.
Point 2: Where buying and selling is intense in the same price range
As a guideline for profit taking or stop-loss points, it may be reversed at the point where selling and buying are violently switched in the latest price range. Please see the blue frame in the chart below. It is a daily chart of GBP / JPY, January 2022. The places surrounded by three blues are where buying and selling are violently switched. From this point, the big flow of selling and buying tends to change.
・ Taking the chart in the above figure as an example, there are fierce selling and buying battles around 157 yen, 153-154 yen, and 149-150 yen. It is an option to settle at each of these points. ・ If you buy at 150 yen, the chart above is rubbing at the latest high of 153-154 yen, so if it goes up to 153-154 yen, you will take profit. If it goes backwards, the loss will be cut off when the lowest price of 149 yen in the most recent price range is broken. ・ If you put in the sale at 156 yen, the above chart is rubbing at the latest low price of 153-154 yen, so if it drops to 153-154 yen, you will take profit. If it goes backwards, the loss will be cut off when the highest price of 157 yen in the most recent price range is exceeded.
Where it has been reversed many times in the same price range
The chart below shows the daily rate of GBP / JPY in 2021. As you can see from the blue frame, there is always buying support and repulsion at 149 yen. Since selling and buying are always switched here, it becomes a strong resistance line. It is also an effective tactic to enter sell settlement and buy entry here. On the contrary, if it falls below 149 yen, a big crash will occur for a while.