How to set up your
Stop Loss & Take Profit Targets

Tutorial
3 min read

Economic event can be a significant driver of FX currency pairs. Using Economic Insight traders will have access to a modern and interactive toolkit that will help them identify and assess how an economic event impacts an FX pair.

Economic calendar computer overview

Getting Started!

First, lets define some popular FX trading terms that you’ll need to know when determining your Stop Loss and Take Profit Targets. If you feel comfortable with the terms below feel free to skip ahead to learn more about our analytics. 

Pip
The “percentage in point” or “price interest point.” This term is used to define the unit of change that takes place in the FX currency pair.
Stop Loss
A set limit for when an instrument reaches this point it closes the trade and automatically sells to avoid a loss on a position.
Take Profit
A set limit for when an instrument reaches this point it closes the trade and automatically sells to guarantee a certain level of profit on a position.
True Range
The highest value out of the following 3 options:
1. The current high minus the current low.
2. The absolute value of the current high minus the previous close price.
3. The absolute value of the current low minus the previous close price.
Price Volatility
The day-to-day percentage difference in the price of any given instrument. 

Setting up your trade.

Within the Volatility Tab you can easily configure the Risk/Reward scenario you would like to use for your FX pair and see the corresponding Take Profit & Stop Loss you'd incur. As you scroll through the calendar, easily get to the screen by clicking "View Level & Trade". After tweaking to your own personal preference, your levels will then be copied over to your broker's' order page.


To set up your trade, you first need to view the Volatility Tab for an Economic Event.
Fill out the following filters:
- FX Pair
- Observation Period
- Actual vs Forecast

Economic insight view over time

How are our Stop Loss & Take Profit targets calculated?

In FX trading, a general Risk/Reward ratio used by trader is 1:2. 
We will use an example with a 1:2 Risk-Reward Ratio (1.5:3) 

Lets look at an example scenario:

Economic Event:
Germany Inflation Rate 
FX Pair:
EUR/AUD 
FX Pair Open Price: 
1.6297
Observation Period:
4 hours after the event 
Actual vs Forecast:
Actual matched forecast


Historic True Range Pips:
45 pips
Average of True Range Pips:
45 pips
Bullish Events: 8/10
Bearish Events: 2/10

Calculating your targets using the Risk/Reward Ratio

To follow our general Risk/Reward ratio of 1:2 (1.5:3) assume:
We use a factor of 1.5 for determining Stop Loss target. 
We use a factor of 3 for determining Take Profit target. 

Stop Loss Target:
True Range 45 Pips x 1.5 = 67.5 pips 
Take Profit Target:
True Range 45 Pips x 3 = 135 pips  

Next, find the Trade Open Price for the FX Pair you are looking at:

In this case, the EUR/AUD Trade Open Price is 1.6297.  

Stop Loss target price would be 1.6297 - 67.5 pips = 1.6229
Take Profit target price would be 1.6297 + 135 pips = 1.6432

Stop Loss Target Price = 1.6229
Take Profit Target Price = 1.6432