Ratio of 1:2 is considered the minimum one should aim for as only a third of positions would need to be profitable to remain break even.
Potential profit and loss can be defined through Stop Loss and Take Profit levels.
Stop Loss and Take Profit are orders to close the position when price reaches a certain predefined level. Stop loss or Take Profit level can be identified with various technical analysis tools:
- Support and resistance: for a short position stop loss is usually placed just above resistance level, while a long position often has stop loss set a little below support level.
- Trend lines and channels: stop loss price is commonly placed outside the channel, above or below the trend line.https://clicks.pipaffiliates.com/c?c=283376&l=en&p=1
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