Knowing When To Exit Generates Profits

A good  trader has rules for each trade. Just finding a good trade does not promise you profits. Many traders get lost in the moment, riding the wave so to speak. Exiting a trade is as important as entering a trade at the right time.

Too many traders, not just beginners, do not control their emotions and they see the markets skyrocket and forget their rules, they get greedy and before you know it they have either ended up with a losing trade or exiting with less profit then they could have.

Every good trader develops a set of rules, which are determined before they make a trade; these include entry points, market expectations, risk and loss protection and exit points or dates. You should never ride the wave or jump out of a market. If you think that the market is surging, you can always close out your position based on your current rules and open another position after you have completed your analysis.

Exit Points can be determined by several factors.

1)      If a currency is not reacting the way you predicted and other fundamental news has surfaced, you should determine an exit point, a point in which you will no longer remain in the market. At this point take your loss and move on

2)      When entering a trade, you should decide at what point your asset will reach resistance or has reached a pivot point and set that point for an Exit. Determine the profit you want to make on this trade and see if it works with the point of resistance or the pivot point.

3)      If your forex currency is moving in your favor but not in ways you predicted or expected, you should have determined ahead of time a safe Exit.

Exit points can be determined by historical data, technical analysis,  such as Support and Resistance Bands, or by fundamental data, you can project that you will leave the USD if the jobs report is below a certain number or if the Federal Reserve increases interest rates.

This evaluation should all be completed before entering the trade.

Every trader has their own buying and selling technique and habits. I hope this article will make its readers take into consideration such an important side of trading because the exit orders and this may only improve their trading results.