How to know the perfect exit point of a trade

[sandro]

The market of Forex is unpredictable. No traders can tell what is going to happen at the next moment. Though this market is very uncertain, there are a group of traders who like to take every pip of profit in Forex. They keep their trades open in the market. They do not close their trades even when they have made a good amount of profit from their trades. They think of taking every pip of the market trend in their advantage and make a fortune in one trade. What actually happens is the market suddenly turns its movement and there is no more profit. The trends are going down and so do the trades in the market. Traders became sick thinking about their trades and exit the market by closing their trades at a loss price. But this is where the Aussie traders are one step ahead in this trading world. All of them uses the trailing stop loss features and book a certain portion of their profit from the running trades so that they don’t lose the entire profit from a certain trade.

It is important for the traders to know when to enter the market. As there are many strategies available for the traders, they can easily calculate the favorable time for making a profit. When traders start to make their profit, what is even more important is to when to exit the markets. If they do not exit at the right time, they will have lost their profit, if they exit from the market early, they will lose their chance to turn their trades profitable. We are going to discuss some important ideas as for when to exit the market for making the best profit.

When you have made a small amount of profit
If you think you need to exit the market when you have made a large amount of profit from your trades, you are not thinking like a professional trader. Most of the average traders in the market think they need to make a very large profit from their trades. They will not get any chance tomorrow and this is the time to make profits. Do not do this. This market will even exist after your death. Do not be greedy and try to take the full profit. If you have made a small profit, exit the market before it changes its trend. In trading CFD you need to use the rational logic to find the exit point of the market. When you place your trade you do the market analysis to find the best possible trade setup. Similarly, when you have profitable trades running you need to do the market analysis and find the best place to close your trade. At your initial stage doing the market analysis for finding the exit point might seem pointless but this is the best thing that the traders can do to protect their profit in this wild market.

When the trend has existed for a long time
No trend is permanent in Forex. Every trend is changing their direction in the market. If your existing trend is going in one direction for a long time, you need to exit the market. But instead of finding the trend in the lower time frame you need to use the higher time frame. Use the traditional features like moving average or trend line trading strategy to spot any possible trend change. You should also look at the formation of the candlestick pattern so that you can easily identify whether the bulls or bears are in control of this market.

Summary: Finding the exit point of a trade is very important for the professional trader because if you don’t do so then all your profitable trade will turn into losing trades. Many new traders have great entry points but still, they are losing money due to bad exit strategy. So work hard on your exit strategy to save your profit.

[Author]

Posts