All right, so 'take profit' and 'stop-loss' deal with two things that you're really
worried about when you're trading - you're always worried about your reward, and your risks.
So how much money you can make, and how much money you can potentially lose - with every
trade.. Obviously that's what people are interested in. 'Take profit' and 'Stop-Loss'
deal with these things... Now, when you're trading, you don't want
to sit at your computer all the time saying "if it gets from 100 to 110, I'm
going to take my money!" On the other side, you don't want to think "My god, what if I
leave and I just lose all my money?"
That's horrible... So, take profit and stop-loss are
automatic ways to.. With a take profit, it automatically takes profit - cashes out -
'Yeah, give me the money!" when you reach a certain point which you predetermine, and
with a stop-loss, it automatically cuts you out of the trade and thinks "all
right, I've lost enough - I've pre-specified if I lose $10 on this, I want
to close it." It automatically does that when you're not at your computer, so you
can go out and have a walk, have a swim, get a coffee, and not have to worry that
you're going to lose everything... So, right - this is a virtual account I'm on at the
moment... If I go to the 'trade markets', and I look for... Let's go for Tesla. Alright, so it's some
company - you might want to buy - some stocks, some shares you might want to buy... I press the
'trade' button, and let's say I want to buy $100 okay... and I'm going to use no
leverage. We'll talk about that later... So, here you see some of the things which you can set
when you make a new trade - you open a new trade... This is if you're trading manually
okay... When you're copying people, it's a bit different. But all right, so I'm opening
this trade in Tesla, and I want to buy $100 worth of Tesla. So I can set the
take profit at $50... you know - so automatically if it gets to 150, it will close
the trade, and it will cash me out, and I'll have made $50, and I don't have to do anything...
I can be away swimming, doing something, and it will automatically close the
trade for me. I can either set it as a cash amount, or as a rate... 50% of the position.
So that will be an actual - at the moment it's at 305.96 - it's saying that "at 456.42,
I will automatically close this trade for you."
and you know - you'll take a profit. I want to see it in cash, so that's $50.
That's your take profit - it takes your profit automatically when you reach a
certain level - you're buying, you want the stock to go up - if it does get up to a
certain point, you've automatically set it so that it takes the money, puts that into
your account, closes the trade. It means you can go out, and you won't miss
potential earnings. 'Stop Loss' A stop loss is the other way...
whenever you trade, you're measuring the risk - 'I don't want to lose my money.'
And the reward - 'Yay, give me some more money!' So, the take
profit deals with taking your reward, when you reach a point that you've set
beforehand. Stop loss deals with your risk, O.K... So a stop-loss is saying
alright, let's say I do go out - I'm out having tea with my friends, or coffee, or going
for a swim, or whatever I'm doing... And I'm out, and meanwhile, I'm losing money - I'm
losing money hand over fist... I don't want to lose it all, and I don't want to have to sit
in front of the machine all the time, just going "argghhhhhh" closing the trade manually. A stop
loss can help you with that. When you click here - the stop loss, the same stuff
comes up - so this is saying "if I lose $50..." If say, I bought 100, "if it goes down to 50,
just close this trade, Okay - I don't want... nothing else, that's my decision - close the trade."
Again, you can set it as a rate - so at the moment it's at 305.86 - if it gets
down to 155.33 - that number, by the way, is a value of the
stock on the actual stock exchanges - it's the number it's at. We can convert that to
money, though - "if it loses $50, get me out of it." It means you can go away, and do whatever
you want, and not risk all of your money... You can set that - you can say
"I want to... I'll risk $15", alright... "So if I lose $15, close it.", and I go to my Take Profit...
"But only cash out if I make $30." All right. So, you can open that trade. Booom. So
that's it, I've opened the trade - 'Buy Tesla position opened at 305.99.'
So now, if I go to my portfolio, and I look down - there's Tesla - these are those
numbers I was talking about earlier - the actual value of it on the stock
market. If I go into that trade, I can see here - I've bought $100
That's .33 units... I opened at this price, the current is
this - 305.33 - so it's gone down... There's my stop-loss,
there's my take profit - so, I can change them at any time, I can go back into the
trade, I can edit it, and I can readjust those however I want. Brilliant thing, very
simple - it means I just don't have to sit at my computer all the time, and I can sort of
pre-determine where I hope it will go, or think it will go, and what I'm, you
know, willing to risk - what I'm willing to lose. There's another thing, which is
called a 'Trailing Stop Loss'. So, a trailing stop loss is really quite
clever ... Trailing stop loss means - let's say I buy it at $100, and I'm willing to lose
$10. So I set my stop loss at $10... So, the value might go up, and up, and up, and up,
and up - so I've got like $300... yay, but the stop loss will only be triggered
if it gets to $10 below where I bought it - so $90. That's a bit useless...
So a trailing stop loss follows your profits. A Trailing Stop Loss says "If, at any
point, it goes down $10, close it." Okay... so it doesn't stick to the beginning - "I
bought 100, if I lose 10 - I'm at 90 - close it." It doesn't stick to the
90... It can keep going up - so I've made 150 yay - "if it goes down to 140,
close it." "I've made 200! If it goes down to 190, close it." So, the trailing stop loss
follows upwards... If, at any point, it goes below 10 - I lose 10
it automatically closes...
And, it's a way of locking in your victories, you know - it means, like - let's
say I bought it at 100, I've gone off for my tea, and set a trailing stop loss of
$10... So, initially that would mean it would close if it gets to 90, but I've
gone off - I'm wandering around, you know - I don't know what I'm doing,
off-road bike riding or something ... I don't do that but... you know - so I'm off doing
something, and the value's going up, and after half an hour, I've made $50...
After, you know, a day, I've made a $100, but I'm not watching... It would be
sad if, after three days, I came back and it's gone back down to 100, and at one
point I was up at $300, and I just wasn't in front of my
computer, so I couldn't close the trade. 'trailing stop loss'
would let that happen - it would mean that whilst I'm out riding the bike
around, having a fun old time, it went down $10, but it closed it - from 300, I
was at 300, it went down to 290 - it closed the trade for me because I set a
trailing stop loss. Now I've locked in that profit - magnificent, and it gives you a
lot of peace of mind. Now, that's if you're trading manually - if you're actually
making the trades yourself - opening and closing positions. With copying people,
which is kind of what I do, you know - to be honest, I don't want to be doing this
stuff... I'm not that good at it - I want to find people - I'm here to find people who are
better than me at doing this, and just copy them automatically... Set my system to
copy them... So, with that - if you look again at my portfolio, let's say there's
this one - Cookie. So, I'm copying her - she's making trades, she's winning some,
she's losing others... I can set a 'Copy Stop Loss'.
Now, a copy stop-loss is different - let's say I put $100 on this trader 'Cookie'
okay - so what I can set, when I copy her, is I can say "If she ever loses 40% of the
money I put in with her..." - so, if it's $100, "if she loses $40..." if
the value of it - I don't care what she's buying and selling, I only care if
she makes - gets results, you know... and doesn't lose all my money... "if she ever
loses 40% of my money, stop the copy." there's no take profit, so I don't say "If
she ever makes 200, stop copying her." No, no, no, if she makes 200, keep copying her, it's
great! I only want to stop copying them if someone else is making more money,
then I'll go copy that guy instead. Or, if they're losing money, then I want to stop
the copy... But I don't stop individual trades, I stop copying her as a whole.
With copy trading, you sort of trust the person overall - they may make 20 trades a
day... They may make one trade a week. What I care about is whether, overall, they're
making profit or they're losing me money. As long as they're making profit, I don't
care how they trade, what they trade - if they do commodities, they do stocks, they do forex...
I don't care - what I'm looking at is their statistics to analyse.. Are they
making money overall? So a copy stop-loss is a different thing from a normal
stop-loss... It treats the person you're copying like a fund - I'm not caring about
individual things, I'm caring about the overall... them as a person. I either copy
them, or I don't - if they lose this amount of money, stop copying them. That's
something that I can set... There we are...