Experts' opinion needed regarding stop loss and take profit placement?

<p>Take-profit orders are often placed at levels that are defined by other forms of technical analysis, including chart pattern analysis and support and resistance levels, or using money management techniques, such as the Kelly Criterion. Many trading system developers also use take-profit orders when placing automated trades since they can be well-defined and serve as a great risk management technique.</p><p id="isPasted">Common methods include the percentage method described above. There's also the support method which involves hard stops at a set price. This method may be a little harder to practice. You'll need to figure out the most recent support level of the stock. As soon as you've figured that out, you can place your stop-loss order just below that level.</p><p>The other method is the moving average method. By using this way, stop-losses are placed just below a longer-term moving average price rather than shorter-term prices.</p><p>Swing traders often employ a multiple-day high/low method, in which stops are placed at the low price of a predetermined day's trading. For example, lows may consistently be replaced at the two-day low. More patient traders may use indicator stops based on larger trend analysis. Indicator stops are often coupled with other technical indicators such as the relative strength index (RSI).</p>

<p id="isPasted">Experienced traders place their stop-loss and take-profit orders based on objective analysis, using a combination of technical indicators, price action, volatility, and a predefined risk-to-reward ratio. This approach aims to remove emotion from trading decisions, ensuring that exits are based on market logic rather than fear or greed.&nbsp;</p><p><strong>Stop-loss placement strategies</strong></p><ul><li>Experts use specific market signals to set stop-losses, avoiding arbitrary percentages that don't account for a stock's typical behavior. </li><li>Based on support and resistance: For a long position, a stop-loss is placed just below a clear support level. If the price breaks this "floor," the trade's initial thesis is likely invalidated. For a short position, the stop-loss is placed just above a resistance level.</li><li>Using moving averages: Key moving averages, such as the 50, 100, or 200-day, can act as dynamic support and resistance. A stop-loss is often placed beyond these moving averages, with longer-term averages providing a wider buffer against minor fluctuations.</li><li>With volatility indicators: The Average True Range (ATR) is a popular indicator for dynamic stop-loss placement. In a volatile market, a wider stop-loss is used to prevent being stopped out by normal price swings. In a calmer market, a tighter stop-loss is appropriate. The ATR helps adapt the stop to current market conditions.</li><li>Below swing lows (or above swing highs): A swing low (the bottom of a "V" shape on a chart) is a common stop-loss location for a long position, as a break below it signals a shift in market sentiment. The opposite logic applies to a swing high for a short position. </li></ul><p><strong>Take-profit placement strategies</strong></p><ul><li>Take-profit levels are also set with a strategic purpose, often targeting areas where the price is likely to lose momentum.&nbsp;</li><li>Based on support and resistance: For a long position, a take-profit target is placed just below a significant resistance level, anticipating that selling pressure will increase at that point.</li><li>Using a risk-to-reward ratio: Many experts set their take-profit based on a predefined risk-to-reward ratio, such as 1:2 or 1:3. For example, if a trader risks $1 on a trade (the stop-loss distance), they would aim for a take-profit that secures a $2 or $3 gain. This ratio helps ensure that winning trades are large enough to cover losses over time.</li><li>Using trailing stops: Trailing stops are dynamic stop-loss orders that automatically follow the price as it moves in a favorable direction. This allows a trader to lock in an increasing amount of profit while letting winners run, without a fixed target.</li><li>Considering chart patterns: Chart patterns can suggest specific take-profit targets. For example, in a "Double Top" pattern, the measured move from the neckline to the peaks can serve as a target. </li></ul>