How to mark take profit and stop loss on TradingView?

Setting appropriate take profit and stop loss levels is essential for successful trading. These levels should be based on careful analysis and consideration of various factors, including market conditions, trading strategy, and individual risk tolerance.

Marking Take Profit and Stop Loss on a Graph

Step 1: Open the chart for which you want to mark take-profit or stop-loss levels. Once inside, click the "Forecasting and measurement tools" icon on the trading panel (left-hand side). This would be the 4th icon from the top.

Step 2: Once a small dialog box pops up, select "long position" or "short position" based on the buy/sell position you want to initiate. Once selected, click on the chart wherever you want to mark the positions.

Step 3: You'll now see a rectangular shape with green on top and red on the bottom. Select cross (cursor) from the top of the trading panel to adjust the marking and manually adjust your take-profit and stop-loss positions.

Step 4: You can also adjust your position by double-clicking on the "stop," "closed," or "target" markers. Once everything is done, review your take-profit and stop-loss positions.

Step 5: Create a limit order based on the stop-loss, take-profit positions, and execute the order.

Step 6: Here comes the hard part, monitor your trades patiently after execution and adjust according to the market conditions.

Determine Appropriate Take Profit and Stop Loss Levels

1. Volatility: Volatility is a asset’s price variation over time. Highly volatile markets require wider stop loss and take profit levels to accommodate larger price swings. We do so to ensure we don't get out of or into a trade prematurely.

Use the Average True Range (ATR) indicator to measure volatility and set your levels accordingly.

2. Market Conditions: Consider the overall market trend and any significant support and resistance levels. These factors will provide insight into potential price movements and help you strategize.

3. Trading Strategy: Different trading strategies require different approaches. For example, day traders might use tighter levels due to the short-term nature of their trades, while swing traders may set wider levels to capture longer-term price movements.

4. Risk Tolerance: Your risk tolerance determines how much capital you will risk on a single trade. Setting appropriate levels ensures that you do not expose yourself to excessive risk.

Pro Tip: Use a fixed percentage of your trading capital as a guideline for your stop loss level. A common rule is to risk no more than 1-2% of your total capital on any single trade.

Common Methods for Setting These Levels

1. Fixed Percentage: This method involves setting take profit and stop loss levels based on a fixed percentage of the entry price. For example, you might set a take profit level at 5% above the entry price and a stop loss level at 2% below the entry price.
2. ATR (Average True Range): I usually multiply the ATR value by a factor that suits my risk tolerance and trading strategy. For example, you might use a factor of 1.5 for more conservative trades or 2 for more aggressive trades.
3. Support and Resistance Levels: Place your stop loss below a support level (for long trades) or above a resistance level (for short trades).

Tip: Don't forget to combine support and resistance analysis with other indicators, such as moving averages or trend lines, to confirm the validity of these levels.

Using Alerts for Take Profit and Stop Loss

Step 1: Open your TradingView chart and select the asset you are trading.

Step 2: Click the "Alert" button (shaped like an alarm clock) at the top of the chart.

Step 3: For take profit, select "Crossing" and enter your take profit price level. Select "Crossing" for stop loss and enter your stop loss price level.

Step 4: Choose the frequency of the alert. Options include "Once," "Once Per Bar," or "Once Per Minute," depending on how often you want to be notified.

Step 5: Select your preferred notification method. TradingView offers several options, including pop-ups, email alerts, SMS alerts, and webhook notifications.

Step 6: Click "Create" to activate the alert. You will be notified when the price reaches your specified take profit or stop loss levels.

Common Mistakes to Avoid

1. Setting Levels Too Close to the Entry Point

This would lead to trades being prematurely stopped by normal market fluctuations.

We use indicators like the Average True Range (ATR) to mitigate this to gauge market volatility and set appropriate levels that accommodate typical price movements.

Pro Tip: Ensure your stop loss level allows some breathing room to avoid being triggered by minor price movements while protecting your capital.

2. Ignoring Market Conditions

Failing to consider current market conditions, such as high volatility or major news events, can lead to inappropriate take profit and stop loss levels.

Regularly analyze market conditions and adjust your levels accordingly. Stay informed about economic news and events that could impact your trades.

3. Adjusting Levels Based on Emotions

Changing your take profit and stop loss levels based on fear, greed, or other emotions can lead to inconsistent trading results and increased risk.

Stick to your predefined trading plan and resist adjusting levels based on emotions. Trust your analysis and strategy.

Can I change take-profit and stop-loss after entering a trade?

Yes, you can change your take profit and stop loss levels after entering a trade, but it's important to do so thoughtfully and strategically.

Here's how to manage and adjust these levels effectively:

When to Adjust Take Profit and Stop Loss Levels

1. If market conditions change significantly after entering a trade, such as increased volatility or new economic data.
2. As your trade moves in your favor, you might want to adjust your stop loss to lock in profits and reduce risk. This is known as a trailing stop loss.
3. You can adjust your levels to reflect this updated information if new technical analysis provides better insights.