Right Time to Close Winning Losing Position Trading Forex

Right Time to Close Winning Losing Position Trading Forex

Right Time to Close Winning Losing Position Trading Forex

Forex trading is largely a speculative activity where you need to make the current market predictions and execute trades in the hopes of making profits.  Although losses are a natural part of online trading, there are a number measures you adopt to improve the chances of a successful trade in the hopes of generating a profit. Although losses are a natural part of online trading, there is a number of measures you can adapt to improve the chances of a successful trade.

Before you enter the forex platform trading and open a trade, you first need to analysis. Once you have performed fx market analysis and feel confident to open a trade, then you should place your stop loss and take profit orders to protect the forex trading account once the order is live.

Why use Stop Loss and Take Profit Orders when trading?

Stop loss and take profit orders are used because the forex market is an incredibly volatile place where the prices rise and fall sporadically and often suddenly. A stop loss order closes the trade once the price drops to a specific level while a take profit order closes the order once the price rises beyond the point that you predetermined.

Stop loss and take profit orders, therefore, form the protective barrier around the trading account, preventing it from being completely wiped out in the event of unstable price movements.

Closing the Winning / Losing Trade

Having huge profits in an open position is a good feeling for the traders and can ignite a sense of confidence in them that they did not possess before. During the time it is not unusual to let your emotions get the better of you. It can quickly prevent you from letting go of a trade, whether because you are scared, hopeful or because you are greedy.

Decisions made during the forex trading should never be based on emotion. They should be based on the objective market analysis and current market the conditions.

For example, if the current market is strongly trending then it usually makes sense to keep the position open until you see a clear signal to exit. By setting a trailing stop or stop-loss order, this ensures that your trade is closed at the reasonable level before the trend experiences a reversal.

You should also look out for the opposing price action. If you see a large bearish pin during a rising market, this is usually a signal to close your trade and take the profits. Likewise, if you have already made notable profits and see support and resistance levels, this is the clear indicator that the time is right to take the profits.

On the other hand, if the market is pointing in right direction and you see signals that reaffirm a trend, then you wish to consider staying in the market a while longer.

Whatever decisions you take with regards to closing the winning or losing trade, it is critical that you have a reliable risk management strategy in place that will protect the account from any market activity. Learning how to correctly read the market instead of trading based on your emotions, is a guaranteed way to enhance the trades and generate stronger profits.



Leave a Reply

Your email address will not be published. Required fields are marked *