Traders often discuss entry strategies but rarely do they talk about how or when to exit a trade. The exit strategy is without doubt one of the most crucial components of any trading system.

FX Exit Strategies: Keeping Your Profits

This post gives a very basic overview, covering a range of exit strategies, for those who have little previous exposure to this area. Some traders prefer to catch quick profits and do not like to be exposed to the market any longer than necessary.

3 Basic Ways to Exit Your Forex Trades

As you can see from the above there are many trading exit methods available and this list is far from definitive. It is sometimes worth trying to match an exit system to the current market conditions. If you think about it — why would you try to trail a stop loss when the market is clearly stuck in a choppy range?

Conversely, it would not always be optimal to try and take a quick profit with a fixed win ratio when the market is trending. Chart 1 shows a bullish engulfing candle at a support area. Chart 2 shows the first bar after our entry went into profit and subsequently retraced. Essentially, we could potentially move our stop loss under this bar — thus cutting our losses if we are wrong and not taking a full bar loss.

Chart 3 shows that holding onto this trade, and giving price room to move in our desired direction, would have been a good decision.

As per the previous example, we could now try to move our stop loss to break even or possibly consider moving the protective stop loss under the current bar when it closes.

This kind of exit approach would be using market support and resistance and is often preferable over an arbitrary fixed breakeven stop loss. The main problem with break-even stop losses is that they do not reference price structure, which can sometimes protect our stop loss as price oscilates.

All About Forex Entry And Exit Strategy

Chart 4 shows price moving close to the top of the range and sellers entering the market. It is reasonable to assume that many people would be taking profit around this area and price could easily go into ranging consolidation phase.

Some traders would only consider moving their stop loss to break even at this entry and exit strategies in forex. There are a multitude of different basic forex exit methods that can be used like this…. Its been working well so far. Good signals on major currency pairs. Home Forex Trading Articles Trading Psychology Forex Trading Tutorials Commodities And Indices Gold Technical Analysis Charts Contact Risk Warning. Forex Exit Strategies Traders often discuss entry strategies but rarely do they entry and exit strategies in forex about how or when to exit a trade.

If you can gain an understanding of the different exit strategies you can then work to find the ideal approach for you trading personality. Lets start off with some of the dibs forex factory common forex exit strategies: Fixed win ratio exits.

Close the trade when your initial risk has been achieved or some other arbitrary value. Trailing the price action. The stop loss is moved in accordance with the underlying price action.

Moving average trailing exit strategy. Dissolution of Entry Criteria. Average daily range trailing exit. Fibonacci extension fixed exit. Support and resistance fixed exit. Any given combination of the above.

Chart 2 Chart 3 shows that holding onto this trade, and giving price room to move in our desired direction, would have been a good decision.

There are a multitude of different basic forex exit methods that can be used like this… Chart 4 So to summarise what we have looked at and review the key forex exit strategy points: Find a basic exit strategy that works for you.

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If you are unable to move stop losses due to work commitments etc then this can be a deciding factor. Demo trade different exit strategies to decide what works best for you and your trading personality. Look at the current market conditions and consider tailoring the exit towards to environment. Consider scaling out of positions — half of your position using a fixed target and half trailing — if this suits your trading style.

There is a lot of merit in employing a strategy which does not require any human intervention. One Response to Forex Exit Strategies red says: July 28, at 2: Leave a reply Cancel reply Comment Name Email Website.