Pros and Cons of Profit Targets
Every trade requires an exit point. Getting into a trade is the easy part, but where you get out determines the profit or loss. Trades can be closed based on a specific set of conditions developing, a trailing stop loss order or with the use of profit target. Pros and Cons of Profit Targets There are many various benefits to trading with a profit target. But there are also some Pros and Cons to using them. The Positive Aspects of Using Profit Targets By placing the stop loss and a profit target, the risk/reward of the trade is known before the trade is even placed. You make X or lose Y, and based on the information you can decide if you want to take the trade. The Profit targets can be based on objective data, such as common tendencies on a price chart. A Profit targets, if based on the reasonable and objective analysis, can help to eliminate some of the emotion in trading as the trader knows that their profit target is in the right place based on the chart they ar