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  1. #1
    upshotsignals is offline Junior Member
    Join Date
    Sep 2010
    Posts
    13

    Default When should you exit your trades?

    In the beginning of my trading career I had a hard time determining when to close my trades whether they were profitable or negative. Of course after some time went by and I gained some experience watching the markets it became easier and easier to figure that one out.

    Trying to explain this to a new trader is difficult because they have no point of reference, nothing to compare these concepts to.

    In the beginning, the excitement is overwhelming and itís almost irresistible not to place a trade.
    Whether youíre beginning or still developing a trading strategy, it pays to sit and watch price action without placing any trades.

    When I first developed my trading strategy I did so without placing any live trades. What I found is that it was easier for me to study price action and market behavior. Simply because I had no emotion with an open trade. I could see exactly what the market was doing rather than what I wanted it to do.

    Trying to watch the market and price action with a live open trade, whether positive or negative, can skew your perception.

    Watching price action and market behavior for a while and trying to identify specific patterns and exact entry points allows you the confidence to identify daily typical ranges.

    Because market cycles repeat on all time frames its possible to develop a system using the same stop loss levels and profit targets over and over again. The key is gaining the experience and the confidence to identify the pattern. Again this can be done by simply watching price action and market behavior without placing any live trades in the beginning.

    Each trader has a different goal which will dictate the type of strategy to use.
    For example, I prefer to trade using the 30 minute and one-hour charts. I also have specific trading strategies which allow me to trade in a trending environment and a consolidation range. Because each one is such a different opportunity, through my study of price action and market behavior, I have identified specific patterns that only move a certain distance each time these trades develop.

    First identify your goals, are you trying to scalp for only a few pips or are you looking to profit from larger moves but only have a limited amount of time?
    Are you going to use a 15 minute chart, a 30 minute chart or a four hour chart?

    Once you have identified your goals you can decide which trading technique to use and which timeframe.
    Identifying the proper timeframe that will complement your trading strategy will determine the average distance price can move within a certain time, specifically daily or weekly depending on your strategy.

    Back to my example and the trading strategy I use, I first identify consolidation and then use a particular technique that repeatedly earns 25 to 40 pips each time I use the technique. The profitability is based on which currency pair. ( the EUR/JPY will learn 40 pips and the EUR/USD will earn 25 pips in the same consolidation range)

    In a trending market or a breakout move, the technique I use will earn 55 to 100 pips, again depending on the currency pair. See the above example.

    Just like we learned in school, good study habits and a good work ethic will go a long way in developing the proper trading strategy and your trading business.

    Good luck in your trading,
    thanks for reading.

  2. #2
    seekforex is offline Senior Member
    Join Date
    Jul 2012
    Posts
    389

    Default

    It is a good and informative article. I have not exit my trading in Forex because i have earned reasonable good money from Forex trading so I want to continue my trading in Forex.

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