It is well known that setting trading goals is very important, hence traders usually spend a lot of time and energy looking for the best entry timing. However, once they enter the market, due to changes in market conditions, most investors do not know how to handle the trade, leading to a lack of confidence and making some irreparable mistakes.

Next, we will explain to you the seven best techniques for correctly setting goals.

1. Fixed Return: Risk-Reward Ratio

The simplest strategy for setting goals is to fix your risk-reward ratio, and the process is as follows:

1) Measure the distance between the entry and stop-loss points. In the example below, the distance is 7.25 points.

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2) Based on the target distance and the desired return/risk ratio, multiply the stop-loss distance by 1, 2, or 3 times.

You will see that this is a very simple technique for implementing a consistent goal strategy. Higher returns: For this strategy, we should pay attention to the risk-reward ratio. That is, the larger the risk-reward ratio, the lower the win rate. Especially for novice traders, it is best to choose smaller targets to have a lower risk-reward ratio, as this can greatly improve the win rate and thus build confidence more quickly.

2. The Most Recent Support and Resistance Levels

A very popular goal strategy is to use the most recent support and resistance levels. Support and resistance levels are the main obstacles for prices, and it makes sense to choose them as targets. With these as goals, there is no need to break through larger support or resistance levels, as this increases the likelihood that the price will not reach the target.Usually, traders look to the left to find the most recent significant support or resistance levels, and then place their targets a few points above them. In the example below, the trader wishes to set the target a few points above the support level in a short trade, as this will mitigate some of the risks that the price movement may rebound to that level.

3. Pattern Projection

This strategy uses the height of the pattern to determine how far the price may move after a successful breakout. In the example below, we can identify an inverted "head and shoulders" chart pattern. We first measure the height from the lowest point of the pattern to the highest point. Then, we project the distance higher.

If you choose this target strategy, it is important to measure the distance from the absolute lowest point of the pattern to the absolute highest point to get the correct distance. Some traders also multiply the pattern height by multiples of 0.75, 1.25, 1.5, or even 2. Similarly, the further the target is from the target, the less likely the price is to hit the target.

4. Higher Timeframe Moving Averages

Due to the mean-reverting nature of the market, this technique is particularly effective in currency pair trading.

In the example below, we can see that the price always returns to the central moving average and continues to move around it. In this example, we are using a 30-minute chart, and the moving average is a 50-period moving average on the 4-hour timeframe. The higher timeframe moving average target strategy is best used for counter-trend trading methods, where you are looking for trading opportunities on higher timeframe moving averages.5. Fibonacci Extensions

Once the A-B-C breakout and retraction scenario has been identified, Fibonacci lines can be drawn from the bottom to the top of the breakout move. After finding the retraction level C, traders can select a Fibonacci extension level as a target from the Fibonacci extension lines.

Typically, the 1.38 and 1.61 Fibonacci extension levels are the closest levels and are most commonly used as target extensions. Prices rarely reach the 2.00 and 2.61 levels, and to achieve these extreme Fibonacci extension levels, a strong trend is required.

6. Time-Based Trading

Time-based targets can be combined with other target strategies. For example, intraday traders often use end-of-day (trading) target strategies and exit all open positions before the end of the trading day to avoid any overnight risks.

Swing traders usually utilize weekend target price strategies to exit all trades on Friday night to avoid the risks associated with holding positions over the weekend and the risk of gap risk.

7. Trailing Stop Loss

Similar to time-based strategies, the trailing stop loss technique can also be combined with other target strategies. However, traders who use the trailing stop loss method generally hope to hold profitable trades for as long as possible and have an open target strategy, which means they do not use target prices at all, but only maximize profits in the trend market by tracking the stop loss price.Typically, traders choose moving averages as tools for trailing stop-loss. In the example below, we used a 50-period moving average, and traders would trail their stop-loss along with the moving average. Moreover, never linger at the moving average to avoid being thrown out of the market during regular pullbacks.

However, there are some drawbacks to consider:

1. By using a trailing stop-loss, you will never be able to capture the absolute maximum of a trend, as the stop-loss usually follows the low points of the trending market;

2. A trailing stop-loss only maximizes profits during an extended trend. Often, traders will give back some of the profits;

3. The holding period may significantly increase, which many traders cannot cope with. It is very difficult to maintain a winning trade for a long time.

Therefore, it is recommended that only experienced traders with a solid trading mentality adopt this strategy. Traders can try these strategies through paper trading and make decisions after experiencing them. As your trading experience increases, as long as you can strictly follow the trading system to execute trades, your control over target points will also become more and more accurate.