Forex Trading TP And SL Best Pairs Steps

To properly set Take Profit (TP) and Stop Loss (SL) in forex trading, pair them with the proper currency pairs. Here's a quick guide on the best steps to take when setting TP and SL, focusing on key pairs:

1. Identify the Volatility of Pair
   Major Pairs (EUR/USD, GBP/USD, USD/JPY): Generally speaking, major pairs are less volatile than exotic pairs, and thus they need more conservative TP and SL levels.
   Exotic Pairs (USD/TRY, USD/ZAR): These are more volatile, requiring wider TP and SL to allow for larger price swings.
2. Determine Market Conditions
   Trending Markets: In trending markets, place the SL at a safe distance from the entry point-for example, below a recent low in an uptrend or above a recent high in a downtrend. Utilize a TP aligned with the strength of the trend.
   Range-bound markets: Near support or resistance for a Take Profit, and take the Stop Loss a little above or below the range level so that a minor fluctuation-related stop does not occur.
3. The ideal setting for TP and SL levels according to the pair.
   EUR/USD: Low volatility: SL around 30-50 pips and TP 60-100 pips
   GBP/USD: Highly volatile pair. SL set at 40-70 pips and TP around 80-150 pips.
   USD/JPY: Range SL between 20-40 pips and TP 50-80 pips because the value is relatively less volatile.
   AUD/USD: Medium volatility. SL of 30-50 pips and TP of 60-120 pips seems to work.
   USD/CAD: SL of 25-45 pips and TP of 50-100 pips. It is also sensitive to oil prices.
4. Risk-Reward Ratio
   Keeping a risk-reward ratio, as far as possible, of at least 1:2 or 1:3 ensures one's profits are much bigger than the risks.
   Example: If risking 20 pips, you are targeting a TP of 40 pips for a 1:2 ratio.
5. Leverage ATR (Average True Range)
   Use ATR to indicate the average volatility of the pair. Set SL a little below or above recent highs and lows, with the help of ATR to assess an optimal buffer.
   Knock TP down proportionate to the average range for the pair. For instance, if the ATR of EUR/USD comes in at 10 pips for a 15-minute chart, then a 20-pip SL and a 40-pip TP are fair.
6. Adjust for Timeframe
   Day and Range Traders: Small SL and TP ratio for tiny timeframes like 5 or 15 minutes.
   Swing Trading (Longer-Term) - Several wider SL and TP since they have larger price movements. It can be applied for major pairs where overnight gap risk is huge.
7. Monitor Economic News Events
   In pairs that are heavily influenced by economic releases (the ones that are most sensitive - eg: USD for Non-Farm Payrolls, or GBP for Brexit updates), use wider SL to avoid closure on spikes.
   Set TP more carefully in anticipation of corrections of the market after newsworthy events are released.
   This would allow a TP/SL combination to grow together with the right pairs and volatility adjustments, trends, and timeframes, thereby increasing your chances of a successful strategy.