What is Profit Threshold in FOREX Trading?
This is a little more complex, but important for money management over the longer term.
When you enter a trade, you will also want to enter a stop-loss and a take-profit order. Almost all traders seek a ratio higher than 1:1 between these two, with take-profit as the larger number for a profit/loss ratio. A 3:1 ratio means you risk one unit to make three units. For example, if your stop-loss (S/L) is 50 pips, your take profit (T/P) is 150 pips. Table below shows the basic profit/loss ratios for T/P and S/L pip values. Ninety percent of profit-loss ratios fall in the shaded area.
[caption id="attachment_12974" align="aligncenter" width="560"] Profit-to-Loses Ratios[/caption]
Once you make 10 trades, you will know how many were winners and how many were losers.