When to enter/exit a trade?

Beginner Questions
1

Hello All,

I’m a beginner trader willing to study and get better.

I’m studying trading and reading a lot, slowly planning to get to my first demo account.

Can someone tell me the basics of where to enter and to exit a trade, after you detect some buy/sell signals, what are the factors that are telling you to enter or exit at a determined point of the chart?

To give you an analogy, It looks like a succesful trader will point out NYC on an empty map because he knows where it is located. My view is just an empty map from now, I dont understand the reason why you would enter or exit at a so specific point.

Hope my question is not too technical or badly explained, thanks in advance for your help/comments.

Good luck to all,

2

Your question is essentially asking all the questions related to speculating, but rolled up in one big ambiguous question.

I understand your intent, but you sound like you’re quite a way off from understanding the basics? Have you tried the school here? There is no simple answer to the question that you have asked. No disrespect intended - just pointing out the elephant in the room.

3

[quote=“naimterrache, post:1, topic:110241”]
I dont understand the reason why you would enter or exit at a so specific point.
[/quote]Simply put, foreign exchange is basically about the relative value of one currency against another. As you know, this value relationship is changing all the time depending on the increasing/decreasing demand for the respective currencies.

Traders are only interested in taking a position if they believe the rate of exchange between the two currencies in a particular currency pair should be (or is going to be) higher or lower than where it is at the present.

The two main ways in which traders decide their view on where the exchange rate will be is either by evaluating the development of economic, financial, fiscal and political situations in the various currencies or by analysing the evolvement of price movements in order to identify a trend and/or significant price levels.

Having decided on a direction, most traders use price charts to identify price levels where it represents good value to enter a trade. This decision will usually compare the potential gain if price moves to the anticipated new level with the potential loss if the price goes the wrong way.

The price at which to enter trades also depends on the traders chosen timeframe. A day trader is only looking for a trade lasting from a few minutes to a few hours. A position trader may be looking to keep a trade open for days, even weeks or more. Their respective entry levels may be very different.

Most traders use price charts to provide a visual representation of where price has been previously and in which direction it is most likely to move in the future, and some kind of technical analysis will usually determine the appropriate entry and exit levels (i.e. target or stop loss).

As @RISKonFX says above, all of these issues are vast and cover a huge amount of learning.

1 Like
4

Hi @RISKonFX Thanks for your answer and no offense at all.

Im obviously a beginner, trying to picking up some concepts. Ive been through a trading course and Im learning the course of this website too.

I know its a general question, as I said I’m kind of lost with the way people enter trade. On which side of the school I should focus to understand this concept?

Thanks in advance,

5

Hi @anon46773462

THanks for taking the time to answer me.

Could you indicate me some videos or ways to improve, the babypips is great but Id love more video examples or tutorials, stuff more A+B concrete.

Thanks in advance and good luck,

6

I have no idea at all about videos or tutorials. There are some book recommendations that have been mentioned in some other threads that would be useful and you might find through the search facility here.

The problem with internet videos and tutorials is that there are thousands of them out there and there is no established training “school” or curriculum and therefore it is very hard to know whether a particular video is genuine or just selling something or simply promoting someone’s own personal view on something that may or may not be of some value.

I do not recommend that you just hunt for some trading strategy ideas that tell you to add this and that to your chart and then give you a list of instructions when to (blindly) buy and sell - and promising you that, hey presto!, you will be in the money. Some things work some of the time and some things work none of the time - but no things work all of the time. And that is why most traders will tell you that your risk/money management control is just as (or even more) important than your strategy.

So it is important that you understand the principles underlying what you do and why and develop gradually. But in order to do that you need to narrow down your area of interest and find your starting point.

i think, from what you have posted so far, that you are not looking to trade purely from a fundamental study of markets. So that means you are looking to trade from price charts. But, as you say, it is very difficult from simply staring at a blank price chart to decide where and when to enter and whether to buy or sell!

Although price moves in an erratic fashion and is often sloppy, messy, indecisive, contrary, jerky and a whole lot more, we still have to assume there is reason, logic and purpose underlying its overall movement. Therefore the objective of applying some form of technical analysis to what we see on the chart is to try to identify what is the underlying direction, when is price doing/starting something significant - and when has it stopped doing it! :slight_smile:

We could say that TA adds structure to the price chart in order to be able to read and assess the evolving “story” embedded within it. From this structure we can identify direction and entry/exit points that meet our defined risk/money management specifications.

I would suggest that you study more in general about TA and its purpose, role and various techniques and decide which approaches suit you best personally when analysing charts.

Here are two example charts that I have posted elsewhere before. They are identical charts but one analyses according to support/resistance levels determined from earlier price actions and the other using MA and RSI indicators to show where the price is moving significantly outside its previous average levels. The point here is only to show that there are various ways to build meaningful structure to your charts and it is a very personal matter which proves most effective.

But the important point to remember is that these techniques are only your trading tools and are only as good as your personal skill in using them and interpreting what they are suggesting. A set of tools is no substitute for your brain.

…and then you still have to decide on your preferred timeframe, your trading objectives (income or capital building), your risk management parameters and money/capital managment policies…and choose a broker :slight_smile:

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7

Hi @anon46773462,

Thanks again for your detailed answer. I really appreciate you take the time to develop your view.

You’re right, I am in the real beginning of my trading path,I feel impatient but I know I got to be patient. My only frustration is that there is so much information online that I feel overwhelm and I don’t have a real plan.

I will follow what you say, study the basics again and again.

Have a great day,

8

I have always found that writing things down really helps a lot. Since you have started this thread why not share your steps as you go. What you you learnt, what you think it means, how you want to use it, etc. There is usually someone here who will contribute.

But try it one bite at a time…after all, isn’t that how one eats an elephant?

9

Maybe my strategy won’t help you but I select my entry and exit point according to the levels of support and resistant! I see; S/R are very much respectable level in Forex.

10

go through pipsology and finish it, things should be clearer then. i assure you, thats one question that would take a lot to answer.

11

There is no certainty exit point in my trades, usually I will put target on support and resistance point on plan order, but not always will waiting plan been reached and still look the update analysis, if likely movement will move vice versa, often I am close manually

12

Hello!

I understand your question perfectly. Unfortunately it is too broad to answer in a few sentences. So, let me give you a hint. But, you need to get more patience, because that is exactly what you need as a beginner in Forex.

Answer to your question:

  1. There is no specific entry and exit point when placing a trade
  2. Each trading strategy is more like a speculation of what the creator thinks and feels is the right point to enter a trade and when to exit.

What you need to do:
Understand what it means to have a trading strategy. You can only do that when you understand how to place a trade, how to take profit, how to use stop loss, and the real basics of Forex Trading. Find a simple trading system to begin with on a demo account. Some of these systems has to do with a combination of Technical indicators.

Here is an example if a very simple system that you can understand: My Trading Strategies for a start

I personally saw the videos. These are old trading systems, so it may not get you profit, but it will help you understand how a combination of indicators can show you an entry and exit point.

I am tired of typing right now; goodluck to you.

13

Entering and exiting the deal will depend on which strategy you choose.