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Apr 3
8.6 Managing Your Trade

The information regarding when to exit the trade is nearly not available. This is the second most difficult aspect of forex trading is to make a decision when and where to exit a trade one you have entered.
I have been a teacher, analyst and trader of the art of forex trading for over ten years now, I have experience in different strategies to exiting a trade, I have come to many conclusions for the effectiveness of each method and on the art of trade exits also. One conclusion is that there is not only one exit strategy for all forex trading situations. Most traders avoid this subject while gathering all books of forex trading.
As I have personally employed many methods with different levels of success and failure, since the lack of information in this area of forex trading, I think putting this article together will enlighten all sorts of traders to the ways accessible to them.
Prior to actually touching some of the strategies of management your trade it is important to know that there is not one lone trade management method that would work for all trades and forex trading markets. One strategy would provide you with the most amount of profit in one forex trading setting, that is to say when applied to a strongly trending forex trading market, whereas that same method would give you less profit as compared to another method in an entirely different forex trading setting, namely an uneven or cycling forex trading market.
Not all the time its as easy as noting the type of forex trading setting you have entered into and then selecting the appropriate exit strategy to go with it. At some points, it may be a matter of easily having chosen the right exit strategy by coincidence, as forex trading settings can change without often observing it.
The trader should know that the capturing of mot of the move may not necessarily be the outcome of any specific exit strategy, and to simply be glad to take a nice portion out of the forex trading market in profit area. The end result is working your trades so that you can acquire profit that go beyond the amount you initially risked in the entry. Try to understand this. If you did not appropriately enter the trade first and foremost or have agreed on larger risk than you should have for a trade that is not intended for profit and you think it does, no exit strategy will make this state better for you. You should then be glad to leave with little or no loss, and do not blame your exit strategy for the immediate exit.
I would like to explain one more thing before I go into some strategies found around my personal logs. A trader who does not plan to stay in a trade for more than a few days is a short term trader. Few exit strategies are prepared for more toward the short term trader whereas other exit strategies are more suited to those who desire to stay in the trade longer and can handle hostile forex trading market moves. First you have to figure out what kind of trader you are, short term or long term, in order to know which plan best fits your nature.
SHORT-TERM EXIT STRATEGIES :
(Note: All examples will assume the trader is LONG in the forex trading market. Simply reverse the explanation in the event you are SHORT.)
3-Day Extreme Technique :
This is the most popular exit strategies and is simple to employ. There are two methods to carry out this plan, therefore I will begin with the basic approach.
Approach #1: when you are in the trade, you require to place an original stop loss to limit your losses during the time you entered too early or have selected the wrong direction to trade. By having this approach your stop loss is placed less than the lowest low of the last three forex trading days. Each day you must modify your stop loss up to just less than the lowest low fo thet last three forex trading days till stopped out. Once including these three days, they are the last three forex trading days that have by now closed. If you have a aim to gain profit than that has been met, begin moving your stop loss less than the low of day that has closed till stopped out.
Approach #2 This approach need you to be a trader that takes benefit of reversal dates, such as Fdates employed by our membership. By means of this exit tactic, your original stop loss is placed less than the low of the real day we enter our trade for less original risk contact. When the low of the last three forex trading days is higher than where we last placed our original stop loss order, we begin to move up our stop loss to less than the lowest low of the last three forex trading days. When we arrive at the date of the following reversal scheduled, we can then move our stop loss high to less than the low of that day when it has closed. In the event the u-turn does happen, you are stopped out at its formation with less loss of your forex trading profits.
62% Ratio Method :
This method works on the foundation that an excellent trend in motion will not review greater than 50% of the prior move, but 62% at the most. The plan is to remain in the trade while forex trading market rectifications against your place as long as it does not rectify more than 62%, therefore, recommending the trend is finishing. This technique needs that you have a profit aim in mind, with the intention that you can come to terms with your ration narrower for the last days of the trade. To carry out, simply take the prior range where the low is lower and high is higher than where you have walked in. Work out a 62% alterations from that top in the direction of bottom and position your stop loss below that price. If you have entered from a value that has not earlier range to reference (specifically the starting of a new trend), employ the bottom of that fresh trend to position your original stop loss below.
3x2 Exponential Moving Average Exit Strategy :
When the forex trading market shifts up and then begins to back down again, then you have a bottom to top to work out from the quickly move your stop los up to below 62% of that bottom top range. When value starts again its upward move forming a fresh swing bottom and surpass the value of the earlier top. (were the correction start), quickly move your stop loss to below that fresh swing bottom. Once again the 62% technique once the next top is forming and the forex trading market is rectifying. As soon as you have reached your profit point, consider falling your ratio down to 50% or 38% to secure profits.
This method need to have a software that can estimate a 3 day rapidly growing moving average with a 2 day counterbalance. The employment of this moving average off of the last 3 days of LOW prices. In case you are short, set your 3X2 Ema to average off the last 3 days of HIGH prices. Employ every day after the close the 3x2 Ema price and then position your stop loss just below previous the open each day. This method is for short term trades and will likely get you out at the first indication of any alteration.
Trend Line Exit Strategy :
This is an easy method that needs an alteration to happen against your place prior to your implementation. A reasonable alteration for this approach is one that is at least 38% of the earlier range. It is estimated like the 62% Ratio technique, apart from that you do not move your stop loss UNTIL the rectification is over. if a rectification happens that is at least 38% of the earlier range, and then the trend starts again its profitable direction forming a swing bottom, a trend link is then sketched from the earlier swing bottom before your entry value to the newly formed swing bottom and out into the future ( in a straight line).
Then you can being moving your stop loss below this trend line for each forex trading day till one more rectification of 38% or more forms a fresh swing bottom. When completed, you would next redraw your tend line from the last swing bottom to the recently formed swing bottom into future. Once again move your stop loss to below this line for every single fresh line will arise a sharper angle upwards than the last till you are stopped out.
18-day Simple Moving Average :
This is fairly easy stop loss method. You place your original stop loss just less than the lowest low of the last 3 forex trading days. When a price chart forms a higher low than the 18 days without any difficulty moving average of the closing price, the stop loss is then placed just some ticks less than the 18 day ma before each day’s open till stopped out.
LONG-TERM EXIT STRATEGIES :
The approaches are principally the same, with the exception that you would apply the short term strategies to a weekly price chart but not the daily price chart. Therefore, an 18- day moving average on the weekly price diagram would actually be an 18 - week moving average. Easily see each weekly chart the way you would view the daily charts once carrying out these short term strategies for longer term forex trading. Those who want to employ my Fdates for reversal timing, Wdates would be employed instead of Fdates for the 3-Day Extreme technique (Approach #2). On the other hand, it would be the 3 week Extreme technique once applied to the weekly price chat.
These are only few of the methods to exiting a trade that is accessible to you. it is barely conclusive, as the maxim goes “that there is more than one way to skin cat”.
This article will hopefully give a place to begin with, and from here you may find out a method that is most suitable for your approach to enter.
As I described at the start of this article, managing a trade is the second most difficult part of forex trading. What is the most difficult part? Disciple. That is an article for some other day.

The information regarding when to exit the trade is nearly not available. This is the second most difficult aspect of forex trading is to make a decision when and where to exit a trade one you have entered.

I have been a teacher, analyst and trader of the art of forex trading for over ten years now, I have experience in different strategies to exiting a trade, I have come to many conclusions for the effectiveness of each method and on the art of trade exits also. One conclusion is that there is not only one exit strategy for all forex trading situations. Most traders avoid this subject while gathering all books of forex trading.

As I have personally employed many methods with different levels of success and failure, since the lack of information in this area of forex trading, I think putting this article together will enlighten all sorts of traders to the ways accessible to them.

Prior to actually touching some of the strategies of management your trade it is important to know that there is not one lone trade management method that would work for all trades and forex trading markets. One strategy would provide you with the most amount of profit in one forex trading setting, that is to say when applied to a strongly trending forex trading market, whereas that same method would give you less profit as compared to another method in an entirely different forex trading setting, namely an uneven or cycling forex trading market.

Not all the time its as easy as noting the type of forex trading setting you have entered into and then selecting the appropriate exit strategy to go with it. At some points, it may be a matter of easily having chosen the right exit strategy by coincidence, as forex trading settings can change without often observing it.

The trader should know that the capturing of mot of the move may not necessarily be the outcome of any specific exit strategy, and to simply be glad to take a nice portion out of the forex trading market in profit area. The end result is working your trades so that you can acquire profit that go beyond the amount you initially risked in the entry. Try to understand this. If you did not appropriately enter the trade first and foremost or have agreed on larger risk than you should have for a trade that is not intended for profit and you think it does, no exit strategy will make this state better for you. You should then be glad to leave with little or no loss, and do not blame your exit strategy for the immediate exit.

I would like to explain one more thing before I go into some strategies found around my personal logs. A trader who does not plan to stay in a trade for more than a few days is a short term trader. Few exit strategies are prepared for more toward the short term trader whereas other exit strategies are more suited to those who desire to stay in the trade longer and can handle hostile forex trading market moves. First you have to figure out what kind of trader you are, short term or long term, in order to know which plan best fits your nature.

 

SHORT-TERM EXIT STRATEGIES :


(Note: All examples will assume the trader is LONG in the forex trading market. Simply reverse the explanation in the event you are SHORT.)

3-Day Extreme Technique :

This is the most popular exit strategies and is simple to employ. There are two methods to carry out this plan, therefore I will begin with the basic approach.

Approach #1: when you are in the trade, you require to place an original stop loss to limit your losses during the time you entered too early or have selected the wrong direction to trade. By having this approach your stop loss is placed less than the lowest low of the last three forex trading days. Each day you must modify your stop loss up to just less than the lowest low fo thet last three forex trading days till stopped out. Once including these three days, they are the last three forex trading days that have by now closed. If you have a aim to gain profit than that has been met, begin moving your stop loss less than the low of day that has closed till stopped out.

Approach #2 This approach need you to be a trader that takes benefit of reversal dates, such as Fdates employed by our membership. By means of this exit tactic, your original stop loss is placed less than the low of the real day we enter our trade for less original risk contact. When the low of the last three forex trading days is higher than where we last placed our original stop loss order, we begin to move up our stop loss to less than the lowest low of the last three forex trading days. When we arrive at the date of the following reversal scheduled, we can then move our stop loss high to less than the low of that day when it has closed. In the event the u-turn does happen, you are stopped out at its formation with less loss of your forex trading profits.

 

62% Ratio Method :

This method works on the foundation that an excellent trend in motion will not review greater than 50% of the prior move, but 62% at the most. The plan is to remain in the trade while forex trading market rectifications against your place as long as it does not rectify more than 62%, therefore, recommending the trend is finishing. This technique needs that you have a profit aim in mind, with the intention that you can come to terms with your ration narrower for the last days of the trade. To carry out, simply take the prior range where the low is lower and high is higher than where you have walked in. Work out a 62% alterations from that top in the direction of bottom and position your stop loss below that price. If you have entered from a value that has not earlier range to reference (specifically the starting of a new trend), employ the bottom of that fresh trend to position your original stop loss below.

 

3x2 Exponential Moving Average Exit Strategy :

When the forex trading market shifts up and then begins to back down again, then you have a bottom to top to work out from the quickly move your stop los up to below 62% of that bottom top range. When value starts again its upward move forming a fresh swing bottom and surpass the value of the earlier top. (were the correction start), quickly move your stop loss to below that fresh swing bottom. Once again the 62% technique once the next top is forming and the forex trading market is rectifying. As soon as you have reached your profit point, consider falling your ratio down to 50% or 38% to secure profits.

This method need to have a software that can estimate a 3 day rapidly growing moving average with a 2 day counterbalance. The employment of this moving average off of the last 3 days of LOW prices. In case you are short, set your 3X2 Ema to average off the last 3 days of HIGH prices. Employ every day after the close the 3x2 Ema price and then position your stop loss just below previous the open each day. This method is for short term trades and will likely get you out at the first indication of any alteration.

 

Trend Line Exit Strategy :

This is an easy method that needs an alteration to happen against your place prior to your implementation. A reasonable alteration for this approach is one that is at least 38% of the earlier range. It is estimated like the 62% Ratio technique, apart from that you do not move your stop loss UNTIL the rectification is over. if a rectification happens that is at least 38% of the earlier range, and then the trend starts again its profitable direction forming a swing bottom, a trend link is then sketched from the earlier swing bottom before your entry value to the newly formed swing bottom and out into the future ( in a straight line).

Then you can being moving your stop loss below this trend line for each forex trading day till one more rectification of 38% or more forms a fresh swing bottom. When completed, you would next redraw your tend line from the last swing bottom to the recently formed swing bottom into future. Once again move your stop loss to below this line for every single fresh line will arise a sharper angle upwards than the last till you are stopped out.

 

18-day Simple Moving Average :

This is fairly easy stop loss method. You place your original stop loss just less than the lowest low of the last 3 forex trading days. When a price chart forms a higher low than the 18 days without any difficulty moving average of the closing price, the stop loss is then placed just some ticks less than the 18 day ma before each day’s open till stopped out.

 

LONG-TERM EXIT STRATEGIES :

The approaches are principally the same, with the exception that you would apply the short term strategies to a weekly price chart but not the daily price chart. Therefore, an 18- day moving average on the weekly price diagram would actually be an 18 - week moving average. Easily see each weekly chart the way you would view the daily charts once carrying out these short term strategies for longer term forex trading. Those who want to employ my Fdates for reversal timing, Wdates would be employed instead of Fdates for the 3-Day Extreme technique (Approach #2). On the other hand, it would be the 3 week Extreme technique once applied to the weekly price chat.

 

These are only few of the methods to exiting a trade that is accessible to you. it is barely conclusive, as the maxim goes “that there is more than one way to skin cat”.

This article will hopefully give a place to begin with, and from here you may find out a method that is most suitable for your approach to enter.

As I described at the start of this article, managing a trade is the second most difficult part of forex trading. What is the most difficult part? Disciple. That is an article for some other day.

 


Trading Guide

 

8.1 A Forex Trading Plan

8.2 Forex Training: What to Look For in a Forex Training

8.3 Forex Course: A Quick Forex Guide for Traders

8.4 3 Lessons Learned from Ace Investors

8.5 How do Top Traders Trade?

8.6 Managing Your Trade

8.7 There Are Clues All Around You

 


Forex Education

 

The Basics of Currency Forex Trading

Technical Analysis

Technical Indicators

Fundamental Analysis

Intraday Trading

Emotional & Behavioral Part

Risk & Money Management