These two orders are a perfect tool for risk management. In this guide, I’ll walk you through how you can set SL and TP on the IQ Options Platform. So, let’s get started!
What is a Stop-loss order anyway?
Before I begin with the technical stuff, I want to tell you about SL and TP. Let’s begin by talking about stop-loss.
A stop-loss is exactly what it sounds like: It’s an order you place to prevent your trades from incurring further losses. It acts as a shield, protecting your account from further depletion. You protect your trades if the market goes against you when you set a stop-loss. So, how can we place a stop-loss?
Placing a stop-loss requires some technical analysis knowledge. You can’t just place it randomly; you need to have an understanding of the market, and analyze where the price is heading and how it’ll react. From a basic point of view, you set a stop-loss at a recent high or low.
As we know, the price creates highs and lows. It is always moving, never staying in the same direction. Knowing this, when you enter a buy position, you set a stop-loss at a recent low. Conversely, when you enter a sell position, you place a stop-loss at a recent high.
Don’t worry; I’ll show you how to place SL with an example in a moment. Recent highs and lows are the spots for placing SL for most strategies. However, some strategies may require some tweaking to place a stop-loss.
Ok, let’s illustrate SL with an example. Below we have a EUR/USD chart.
You can see that I place a stop-loss near the low of the buying position. As I mentioned, this forms the basis for most strategies. I’ll show how you can place a stop-loss order in IQ Options later.
What a trailing stop-loss?
Now, placing a stop-loss isn’t the end of it. You can also place a trailing stop-loss, different from a typical SL. Like a snake trail, a trailing SL moves along with the price. You place a trailing stop-loss and a stop-loss together. What it does is follow the price, thereby minimizing risk exposure.
Whether it’s moving up or down, the price has to stop somewhere. A trailing stop-loss goes along with the price and drags itself to a certain level. When the price goes against your direction, a trailing stop-loss order executes, preventing any further losses.
Let’s give you an example of trailing stop-loss. Say you enter long at 1.2626 on the EUR/USD. You place a trailing stop at 1.2616 – so it’s ten pips away. Your actual stop-loss is at 1.1190.
If EUR/USD climbs to 1.2631, your trailing stop will also rise to 1.2621. If the price drops, your trailing stop executes, saving you from any further loss.
What is take-profit?
Now that you know what stop-loss is, let’s move on to take-profit. TP combines with SL to form the basis of risk management.
As the name suggests, take-profit order lets you end the trade on a profit. You set the TP at a specific level, and your position ends when the price reaches it. Sometimes the market can get wild, so it’s best to take what you can rather than let trades ride for too long.
The market can bounce back any time, leaving you with losses. Therefore, TP takes the guesswork out of the equation and yields you a profit. Like the SL, setting TP requires knowledge of technical analysis. You can’t just set it anywhere. Many people set it too far from their entry point. It’s not a good look, as you never know if your trade will reach this level.
In addition, setting TP depends on your trading strategy. For some strategies, you have to set TP before the trend changes. For others, you have to look for indicators to place TP. Let’s explain this with an example. On the EUR/USD chart below, you can see how I placed the take-profit.
I entered the short trade, and I placed my SL to the recent high. For TP, I choose the recent low point. You can see the TP executed, and I make some cool pips in the process.
The example above is just a basic version of setting TP. You need to set the TP according to your trading plan for complex strategies.
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How to set TP and SL on the IQ Options platform?
Trading on IQ Options is hassle-free. You just select the asset, click the “+” option on the platform, and that’s it. So, let’s see how you can set SL and TP on the platform.
When you first sign up on the platform, you need to choose either a live or a demo account. After registering your account, you can place trades using the “+” option on the platform. After that, you need to select the timeframe and indicators. You can select any timeframe from 1 minute to 1 month. (If you don’t want to use the indicator, skip this part – however, I recommend using indicators.)
After conducting technical analysis, you need to input the investment amount. The IQ platform allows you to choose the amount you wish to invest in a single trade. After selecting the amount, you’ll decide your position. You need to decide whether the price will rise or fall. You can avail this option when you first place a trade.
If you want to go long on the trade, you have to click “buy.” Conversely, you have to select “sell” if you want to go short. Now comes the most important part: setting TP and SL. I’ve explained how you can set TP and SL above, but in those examples, I placed them manually. On the IQ Options platform, you have a choice to either set them automatically or manually.
When you place the trade, the IQ platform gives you an option of setting SL and TP. You can set both orders at an equal distance, such as 30 pips. You could also set them differently according to your trading strategy.
For instance, if you set SL 20 pips away, you can place TP 30 pips away. There’s a position auto-closing option on the platform.
Setting SL and TP on the IQ Options platform
Through this, you can automatically select SL and TP levels. IQ Options sets your TP and SL in a percentage of your investment. For example, if you invest $100 and set SL at 2% on a single trade, if the trade goes against you, then you lose $2.
Take-profit also executes in this manner. You set TP at a certain percentage of your amount, say 2% or 3%. Then, when the price goes in your favor, you get 2% or 3% of the total profit.
I mentioned trailing stops also. Trailing stops must be set manually on the IQ platform if you wish to use them. In that case, you can set it according to the instructions outlined earlier.
IQ Options SL and TP calculator
IQ Options is kind enough to provide us with SL and TP calculators, which eliminate the hassle of calculating SL and TP manually. You can find the calculator on the Trader’s Room option in your account’s dashboard.
The calculator comes up with the percentage according to your investment. You enter your initial investment in the calculator, and it tells you SL and TP levels. It’s a very helpful tool, because in some strategies, determining SL and TP becomes difficult. The SL and TP calculator takes this difficulty out of the equation.
IQ Options SL and TP calculator
Why use take-profit or stop-loss orders?
Take-profit and stop-loss orders are effective tools for risk management. They remove the guessing game and help you take profits or prevent losses.
Does IQ Options have an auto feature for SL and TP orders?
Yes, the IQ Options platform allows you to place TP and SL orders automatically. You can do this by selecting the auto position option.
Can I use a trailing stop on the platform?
You can use the trailing stop manually on the IQ platform. However, the platform doesn’t have an automatic function for setting a trailing stop.
Is SL and TP calculator worth a try?
The IP Options SL and TP calculator help you in determining SL and TP on your initial investment. In addition, it helps in placing stop-loss and take-profit orders on complex strategies.
Setting TP and SL on IQ Options isn’t complex. You can either set them manually or automatically. The platform gives its users a full trading experience with its easy-to-use trading features, including their SL and TP calculator to remove all the calculation work.
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