Closing a Trade

Beginner Questions
1

I’ve been trading live now for over 2 months and i have no problem at all entering a trade which is good as most find that the hardest part. I seem to make quite a few pips.

My question is, when is the right time to close a trade?

I have gotten either to greedy or worried and stopped my trade, only to then find out it reverses. Few tips maybe? Overall if i knew when to close trades my account would be a good margin over 200%.
Thanks alot!

2

One answer could be, whatever signal got you into the trade the opposite signal gets you out.

Or, decide on a R:R say 2:1 work out your stop loss & get out when the trade is 2x that.

Or , decide on a pips/trade profit target ie 30 pips & close out at that point.

However you say that “if i knew when to close trades my account would be a good margin over 200%”

How do you know? Is this in fact the answer close out when you feel it is the right time.

Now all of these approaches are valid however a warning needs to be given,

which ever method/system you decide upon needs to be implemented [U]all the time[/U]

3

Why not just trail your profits with a fixed stop loss. This way, if you’re trade is a loser, than the stop loss will close out your trade. If you are in the money, trailing stop loss will Pretty much all to maximize your profits and close out your trades when the time is right.

4

I use stop loss and take profitin tradingthey can easily close my trades tothe point where I set .This is a good way after analysis that manages your risks affordably. Closing tradeon right pointis very necessary because if you remain it going for so much time it can be turnin to loss .

5

It is necessary that whenever we trade we should make a plan and stick to it so that we will be able to make right entry and exit from risky Forex market.

6

That’s what I use and is very effective!

7

On the right time to close a trade, well, that’s still part of the “unknown”. Even signals can do only so much, but at the end of the day, you need to follow your strategy to the letter and get out unless of course you know for certain that the market is going to trend in the right direction…
As others suggested, use stop loss and TP ratio

8

actually i use fibonacci to close my position, i am using some systems, but most of all i trust MACfibo system (Moving Average Crossover Fibonacci).
Maybe you can see my EUR/USD trading today as references, if you want to know about this Macfibo you can search it in the babypips.com
here is my H1 EURUSD chart today

a.jpg700×347 39 KB

9

[B] Closing a Trade[/B]
Use stop loss and take profits, as well as a good reward/risk ratio. You can also use trailing stop to protect your gains or profit. Sometimes i adjust my stop loss to lock in my profit. This to prevent turning a wining trade to a loser. Good lock every body out there. Study hard!

10

I open a trade without setting the take profit, but set my fixed stop loss. Then set a trail stop at 70% of my intended profit level. Once the 70% has been reached, I take 70% of the profit, that means closing the order on 70% of the lot size. I let the rest run with a trail stop = 1.2 x ATR level. The ATR indicator should be available on your platform. I use MT4. Try it. I did a trade yesterday and made $105 in less than an hour. Enough for the day.

11

This is, in my opinion, the hardest part about Forex trading, when to close, how to adjust trailing stops etc… For intraday trading I have seen my accounts go crazy. For nearly 5 weeks in a row, I checked on my trades around 5am Tuesday morning (EST) and saw profits of $2400, $1300, $1500, $800 and I forget the finally week. However each of those weeks, by the end I was down, every time. If I had closed out all trades, each time, I would be up almost $10k ( taking in the loss I suffered for not managing).
So having a strategy to enter trades and stick to it is great, but having a strategy to exit trades is far more important. 1:1 risk, bullet proofing a trade when it is a profit, and also making sure you don’t crowd out a trade by adjusting the stop loss to close to the action.
I suggest 3 things;

  1. Exit trades when you reach a certain % of profit - this way you don’t feel any different if a trade runs on because you accomplished your goal.
  2. Close half of all trades at a certain monetary value, say you need $1300 a week minimum, your trades are running $1900, close out a % of ALL trades (even the losers unless you know for sure that it will be a winner) to reach your required weekly goal. Closing out losing trades is tough because we all want to be right, but those losers could get worse.
  3. Set a reward/risk ratio. The only thing with this, is that you might be inclined to let the losers run and lose even more. Sometimes you need to cut your losses instead of hoping.

Lastly, the biggest thing to overcome, is the should have would have feeling. What ever you decide to do to close out trades, DO NOT look back and say if only I did _________ . This will undermind your strategy. Decide what works, maybe test out on a demo account your plan and see how you feel and what fits your style.

12

Ah, the regret factor…that’s something every newbie is bound to go through - no arguments there. Just concentrate on the strategy, set your SL and TP, trailing or fixed and stick with it…cannot stress the last part enough