How to exit a Forex trade in time?
Most Forex textbooks, manuals, training courses emphasise that correct entry into a trade is the most important factor in profitable trading.
Forex trading for beginners means the search of such trading system, which would provide almost one hundred percent right entries. And that is it! Some people get hung up on this idea for a long time and lose themselves for online trading, others, after spending a lot of time, finally realise that it is impossible to find such a system. A win-win forex strategy is a scam. Few people focus on exiting a trade, and in vain. After all, wrong exit just as reduces the profit, and even leads to the loss.
Absolutely any system with probability of correct entry, even 50X50, will do. And in this case, if you follow the conditions of money management, the ability to find a place for the correct closing of the position, profitable forex trading will be a reality.
How to exit a position in Forex? There are several important postulates on this subject for every trader.
1. Exiting a trade is more important than entering it. Missed entry into the market does not promise a trader losses. Missed exiting can not only nullify profits, but also lead to losses.
2. Exits from a trade are subdivided into predictable and situational. Predictable exits are calculated in advance, while situational ones are implemented, of course, according to the situation.
3. Predictable exits from the transaction include stop-loss and take-profit. The situational exits are closing from the market according to the trader's system signals. The intermediate variant between them is closing on the trail.
4. What is a proper exit? The proper exit provides that the professional trader simply will not enter the trade, if the projected exit is too unprofitable, not corresponding with reasonable risks. Thus, if a trader sees a good entry into a trade, his trading system gives a very strong signal to open a position, he will not enter the market if the stop-loss on this trade is planned too large.
It should also be remembered that after setting a stop-loss, a professional trader will never move it in the direction of increasing losses, which is typical of many beginners.
5. Is Take Profit beneficial? Trading on Forex, where exits are limited to fixed Take Profit is in most cases irrational. However, take profit can be set far away, at some significant level, and gain a profit by trailing or moving the fixed stop loss. But if the market situation suddenly began to develop not in your favor, and the trading system gave a signal to exit the transaction, it must be done immediately, without waiting for the price to take profit. Such an exit may not take place.
And the most important condition is highlighted separately. Whatever the rules of withdrawal from the trade in your trading system are, they must be strictly adhered to, without changing them during an unfavorable trading situation.
Discipline is the main factor of profitable work of any trader.