How to Calculate Stop Loss and Take Profit Easily // set profit target limit order


How to Calculate Stop Loss and Take Profit Easily // set profit target limit order forex stocks investing day trading david moadel welcome to looking at the markets with
David Modell I’m going to show you how to quickly and easily calculate your
stop loss and your profit target alright your stop loss is going to be below the
current price of the stock where you bought it okay and that way you can
avoid having a large or unmanageable loss you’ll just take a small loss if
things go against you if you buy a stock and it goes down now what if you buy a
stock and it goes up then you want to have your profit target and that’s going
to be a price above the price where you bought the ETF or stock or currency
commodity cryptocurrency whatever it is this works for anything almost anything
you can buy all right so let’s do the profit target first
that’s going to be a price above the price where you bought it all right so
right now just as an example I’m on Google Finance right now and I’m looking
at SLV which is the iShares silver trust it represents a silver okay it tracks
the price of silver and let’s say right now it’s $14 in 96 cents per share let’s
say that’s where you bought it all right let’s say you bought it right now at
that price first you could set your profit target that’s going to be a price
above 1496 and that’s where you’re going to sell it if things go the way you want
it to okay if the price goes up alright so how do you calculate that well you
definitely want to make your profit target bigger than your stop-loss
okay because you want to let your winners run and you want to cut your
losers short all right in other words you want to make more money when you win
then you lose when you’re wrong okay so let’s say you want to make your profit
target I don’t know let’s say your profit target is going to be 15% above
the current price and your stop-loss is going to be 5% below at the current
price that’s actually a nice ratio all right
so 15% above the current you know the price where you bought it and 5% below
for the stop-loss that’s a three to one ratio all right 15
percent to five percent that’s three to one and I like a three to one ratio that
way if you win then you win three times as
much as you lose when you’re wrong all right and that way even if you’re right
only half the time because it’s a three-to-one ratio you still come out
ahead on average if you have a large enough number of trades no guarantees
but that’s how it often plays out all right so all right so let’s go ahead and
set our a profit profit target first we want it fifteen percent above the price
where you bought it let’s say you bought it at fourteen ninety six so you type in
fourteen point ninety six all right and you want it fifteen percent above so
what you do is you add 15 to 100 all right you add 15 plus 100 you could
probably do that in your head it would be a hundred and fifteen
all right so times you type in the share price and then times and then not
fifteen but a hundred and fifteen remember you add a hundred to the
percent okay and then you don’t hit equals what you do is you hit that % BAM
there it is easy right okay seventeen twenty we’ll just round it
down to seventeen dollars and twenty cents that’s where I’m gonna sell I’m
not gonna sell until it hits 17 2000 right and that would be a fifteen
approximately fifteen percent profit okay so once again to repeat that it’s
real simple you type in two to set your profit target type in the price where
you bought it okay and then you hit x and then if you want fifteen percent you
would add a hundred to it and make it one fifteen and then you hit that
percent sign there it is all right let’s say if if you only want ten percent as
your profit target okay let’s practice that one fourteen ninety six that’s
where you bought it let’s say all right and then x let’s add ten plus a hundred
so it’s 110 and then you don’t hit equals you hit that percent sign if you
wanted a ten percent profit target you would take profits at let’s round it to
16 dollars and forty six cents let’s say sixteen forty six
alright and you could set a limit order with your broker to sell at that price
all right now let’s do the stop-loss alright let’s go back to the stop-loss
remember that should be less than your profit
target all right if your profit target is 15% then your stop-loss should be
maybe 5% all right so let’s say you want a 5% stop-loss let’s type in the price
where you bought it we’re setting a stop-loss now and you
could set that with a stoploss order with your broker by the way you can make
it a stop limit order you can make it a limit order but check with your broker
on how to do that because every broker is a little bit different
all right so you type in the price where you bought it to set your stop loss now
let’s say you want a 5% stop-loss well you would take 100 and subtract five
okay it’s a hundred minus whatever percent stop-loss you want so a hundred
whoops okay so I’m sorry you take 1496 and in your head you can say okay what’s
a hundred minus five that’s 95 okay so times 95 and then you hit that percent
sign there’s you stop there’s your stop-loss let’s round down to 14 21 okay
$14 21 cents I might set a stop loss or stop limit order with my broker for 14
21 simple as that okay so let’s do it again okay so current
price if the times key there okay the multiply key and then if you want a 5%
stop-loss what’s a hundred minus 5 that’s 95 then hit don’t hit equals hit
that % 1421 all right let’s say I wanted a I don’t know okay well let’s say you
want a three to one ratio let’s say your profit target is going to be 10% so you
know I might set the stop loss at 3% let’s say okay so let’s try a 3%
stop-loss for this type in the price where you bought it
1496 again okay at the times now if you want a 3% stop-loss you take a hundred
minus that number a hundred minus three you could do that probably in your head
that’s 97 100 minus three okay and then you hit percent okay
so that’s a tighter stop-loss that’s three percent which would be let’s round
it down to $14 and 51 cents okay and you can set a stoploss
order or stop limit order with your broker for 1451 okay so it’s really as
simple as that all right so you can do that with your calculator you might also
be able to program an excel a Microsoft Excel spreadsheet to do it for you
automatically that might make it quicker okay and that’s a whole other lesson but
you can do it that way to make it quicker and easier for you all right and
once again I strongly suggest making your profit target bigger than your
stop-loss it could be a two to one ratio for example 10% profit target and 5%
stop-loss or you can make it a three-to-one ratio as we mentioned
before the example might be 15% profit target for you know with a 5% stop-loss
that’ll be a three-to-one ratio all right but you have to decide what you
want to do I cannot tell you what to do but these are ideas in order to let your
winners run and cut your loser is short and to automate it with your broker with
limit orders and stop-loss and stop limit orders all right so if you found
this to be helpful then please give this video a thumbs up on YouTube leave a
comment and please subscribe to my youtube channel so you can receive
updates on my latest educational videos and if you want some help with putting
together a trading or investing plan you can contact me at any time by email my
name is David Modell and you can contact me by email at David Modell at gmail.com
thanks a lot I really appreciate it and I’ll talk to you again soon

67 thoughts on “How to Calculate Stop Loss and Take Profit Easily // set profit target limit order”

  1. Question. If I want an average gain of 15% over twenty stocks. Of those 20 stocks, 25% are losers. With a 7% stop loss, what would I need to set my sell target % at?

  2. Another way to calculate percentages:
    Say you want to know what 15% of 100 is.
    100 * .15
    Multiply by whatever the percentage is with a point in front of it.

    Cheers

  3. David, on my iphone calculator the only way it works is to actually hit the multiply symbol after the calculation, i.e.. 14.96×97=14,5112 then immediately the percent symbol for14.511

  4. What if you are setting your take profit above a strong Support and it might not breakout for days..

  5. Brilliant video. I am not trying to be rude but I felt like this was explained for toddlers. The video will definitely help even the average 5th grader which is actually a daunting task sometimes. Fortunately, my brain works at rather better speeds. Especially the type of discipline needed for day trading lol. SO what I've done is make the formula for those who could use the simplicity of understanding. Assume x=the price per share so in this case 14.96. Lets also assume n=the percentage of risk whether its profits or stop loss.
    Profits=(1+n)*x . ———(1+.15)*14.96=17.204
    Stop Loss=(1-n)*x . ———(1-.05)*14.96=14.212

  6. Thanks for the really great points on how to calculate a stop loss. This was a really good video, keep up the great work!

  7. wondering about getting stopped out due to average trading range being over 5 percent…I guess not so much an issue on forex just on stocks? What about setting the 5 percent above a support line and the 15 percent below a resistance line?

  8. I want to set the stop loss after buying a stock.
    Just think, I bought a stock at $ 550.30, at that time I did not set a stop loss. Then the stock becomes $ 550.60. t that time I would like to set stop loss

    just tell me how can I do this?

  9. you don't have to use pussy to increase your clicks, I found you via search query not your thumbs so you should focus on that instead

  10. David Mugail Sir, I am a beginner retail investor. I am Varughese from India. Do we put stop limit order for buying stock in stock market or only put Target price?

  11. Finally! Thank you David! Finally i understand this too..
    Have you ever taught about making a video how to calculate what would be the profit in $ if the stop loss is at a certain price.

  12. David, I wish I had seen this video a year ago. You have made calculating the stops and profit levels extremely easy, whereas I was making it so much harder. I was taking the percentage of say 15 percent, times the amount of the stock cost, then taking that result and adding it to the cost of the stock to get the profit level. Your way is so much easier. Thanks for making the not so obvious as simple as watching your video. It is appreciated.

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