Your trading plan should have a whole chapter on this, so I will try explaining myself as much as possible about what a Forex exit strategy is and how to include it in your trading. Also to be included in your trading plan of course.
We take so much time and effort to analyze when it the most appropriate time to enter a trade, lots of charts, indicators, setups and probability checks to make us feel secure before the open of the trade that sometimes nobody talks on when to exit the trade, ie the Forex exit strategy. You exit at point of panic and fear or greed? Of course, how to exit without major regrets from the position of course we shall try to focus upon.
How many of you have exited a trade out of fear when they have seen the market run further just after closing the position, losing all those possible pips. How many times did you close a position on the other hand at a nominal loss out of fear of getting worse, only to watch it retrace back to your profit target soon after you closed the trade licking up your wounds. If these have been happening to you than your Forex exit strategy is not properly in place or it is not as sound as it should to make you feel comfortable.
First of all however make sure to pause your emotions and try as much as possible to get them out of your trading plan as both fear and greed are going to bang on your head so often that they might lose your focus and concentration on the trades and targets you want to achieve.
Indicators are extensively used to find entry points as previously said but that should not be it. Indicators will also help you to understand if the open position is exhausted or not. The principle of market movements with a lot of smaller retracements always is in place as you should have already noticed from your trading by now. So if you know of them do not make them leave you react negatively and click that closing trigger too soon or too late.
Use again the indicators to see oversold or overbought areas in order to understand if the turning point is near. Use support and resistance points, Fibs are also a great way to target your trades as they will always reach important retracement points that any currency pair reacts upon them. So even if it is not the full Forex exit strategy still try to collect part profits and move your stop loss to breakeven regularly to secure long term survival.
We take so much time and effort to analyze when it the most appropriate time to enter a trade, lots of charts, indicators, setups and probability checks to make us feel secure before the open of the trade that sometimes nobody talks on when to exit the trade, ie the Forex exit strategy. You exit at point of panic and fear or greed? Of course, how to exit without major regrets from the position of course we shall try to focus upon.
How many of you have exited a trade out of fear when they have seen the market run further just after closing the position, losing all those possible pips. How many times did you close a position on the other hand at a nominal loss out of fear of getting worse, only to watch it retrace back to your profit target soon after you closed the trade licking up your wounds. If these have been happening to you than your Forex exit strategy is not properly in place or it is not as sound as it should to make you feel comfortable.
First of all however make sure to pause your emotions and try as much as possible to get them out of your trading plan as both fear and greed are going to bang on your head so often that they might lose your focus and concentration on the trades and targets you want to achieve.
Use again the indicators to see oversold or overbought areas in order to understand if the turning point is near. Use support and resistance points, Fibs are also a great way to target your trades as they will always reach important retracement points that any currency pair reacts upon them. So even if it is not the full Forex exit strategy still try to collect part profits and move your stop loss to breakeven regularly to secure long term survival.
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