Forex trading. How important on time get away...
Closing trades on time is important!
How does a good Forex trading system compare with a bad one?
First of all, the algorithm of deals closing.
If the system is properly designed, this aspect must be given no less attention than the development of position opening situations. And even more, because the importance of timely closing a position is much higher than entering the market.
In terms of its intended purpose, position closing is carried out in two cases:
- minimizing losses; - profit fixing.
Calculating potential losses is a mandatory part of any trading system. Regardless of methods used by a trader to solve this problem - using locking or opening counter-orders against losing positions, or setting protective stop-orders. In any case, exit from the market in case of an unfavorable trading situation should be provided for.
Forex trading without position protection will, sooner or later, lead to a total loss of the deposit. And, in order not to learn from your own mistakes, this statement should be taken as an axiom. Although, if we put aside psychological aspects, placing necessary orders and thinking of a protective exit from the market is much easier than developing an exit system for profit taking.
Any business, and trading at Forex naturally belongs to entrepreneurial activity, means earning some profit. And the bigger it is, the more enjoyable it is for the business owner. To close a profitable position early is to lose some of your profit and patiently wait for the next entry into the market. Close it later - in the best case, it will be left with some of the profit, or even without it, if a stop loss occurs. And it is good if this stop order is located in the Breakeven area.
It is a great art - to timely close the position with the maximum possible profit. And without the skillful use of the algorithm of transaction exiting, trading just makes no sense. A missed entry can only cause a trader a feeling of annoyance, but it will not damage the deposit. It not only affects negatively financial balance, but also influences trader's psyche making him/her quickly compensate for the allegedly missed profit and open position either ahead of the lagging trend or, worse, against it.
Close - Open - Trade?
But the trader should always remember that closing a position does not mean an instant opening in the opposite direction. The market is inertial and is not capable to turn in the opposite direction "all of a sudden". Any movement begins by a flat, and ends by a flat. Naturally, the reversal time will be different for various timeframes, but in any case, the opening of a new position should be based on entry signals calculated for a certain time interval, in which the trader trades.
The skill of the trader is not only in the ability to open correct positions, though it is a very important quality. Opening a position and closing a trade are indivisible parts of one trading system, and only the right combination of these two components will make a trading system work.