Currency Trading: 3 Tricks To End Premature Exiting Of Trades
When real money is on the line, new Forex traders find it very hard to manage the trader properly. Before the trade is placed, they are often calm and rational and can pinpoint entries based on the trading system they are following. But after the trade is placed, and real money is at risk, they let emotion take over. This results in managing the trade based on emotions of fear and greed, instead of the rules of the trading system itself.
Let's say you place a trade and have the good fortune to see it go into profit immediately. Even though you are not at the designated take profit level, you exit the trade early to keep from losing the money you already see in your account. Or, you get into a trade and it goes against you so you exit the trade before the stop is hit. In a lot of cases, price continues to your original price target, or turns around and goes profitable, which means you lost money by exiting early. In either case, you were not following your trading system, which is not a good thing. I'm going to go over 3 ways you can keep from letting emotion take over which makes you exit trades early.
In the first scenario, the Forex trading system you are using sets a stop loss and has one take profit level. So, you place the trade and set the stop loss and profit target in your trading station. The best thing to do now is accept the risk you have in the trade and let the trade play out one way or the other. Walk away from the computer if you must. At this point, watching the chart is valueless and will only lead to a roller-coaster ride of emotions. At this point you should either walk away or go to other charts looking for other setups until the trade either hits your stop loss, or hits your price target.
In the second scenario, you use a system where you place the initial stop loss, but the target is open and only triggered by a signal in the opposite direction. In this case, you need to watch the charts to see when to exit, so you can't just walk away from the computer. In this case, I would click on the Terminal Window so it goes away and you can't see the pips or money in the trade. This way you can make choices based on just what you see on the chart, without having your profits tempt you to exit early.
In the third case, you are using a Forex trading system where you set your initial stop loss, but you plan on moving your top and taking partial profits at predetermined levels. There is a lot of management for this type of trade. To make this easy and keep emotions out, you can use a Trade Management EA which does everything for you on autopilot. At this point, just let the Trade Management EA take care of the trade management and walk away from the chart.
Article Source: FxTradingStock.com
About the Author
Get my free Forex Trade Manaement EA's by joining Forex Insider Pips. The exact process you need to follow to succeed in Forex is revealed at http://www.tradetheforexmarket.com
by: Edward Lomax
Total views: 14
Word Count: 526
Date: Sat, 15 Jan 2011
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