YouForex

Most traders never plan or even discuss their Forex exit strategy. If you look on the Internet, it’s full of Forex entry signals and set-ups. When I first started trading, my only concern was how to enter the market. I though if I could just get a good trade set-up and get in at the right time the profits would just fall in my lap.

Little did I know that the Forex exit strategy is just as important, maybe even more. Although, traders will argue which is more important, you need to understand that they both are. Just make sure they are planned and part of your trade plan. It’s true that a successful trade entry can greatly improve your trading win-rate percentage and overall profit. Thus, the reason why most traders pay more attention to the entry and not their Forex exit strategy.

Never Over Look Your Forex Exit Strategy

Here are some important elements to your exits strategies that you must consider. Hopefully, they will help you design a better exit signal and give you a better understanding to the importance to your overall plan.

No.1 – Know What Your Forex Exit Strategy Is Going To Be

Before You Enter The Trade.

As I mentioned before, make the exit part of your overall trade plan. Never enter a trade without planning your strategy for your exit profit target or your stop loss.

No.2 – Consider Multiple Forex Exit Strategies.

You can design you trade plan to incorporate multiple exit strategies to try to gain as much profit as possible. Especially, if the market is trending nicely in the same direction. This strategy is when you would take profit at pre-designed levels as the trade is working I your direction. For example, you would exit 1/3 of your position at 20 pips profit. Another 1/3 at 40 pips profit and the remaining 1/3 at 60 pips profit.

No.3 – Always Initiate A Stop Loss As Part Of Your Exit Strategy.

A stop loss can also be your exit strategy if your trade does not go in your direction. It’s there to protect your trading account and will allow you to trade another day. You can also incorporate a “trailing stop” as part of your Forex exit strategy. For example, if the trade was in profit 20 pips, you could move up your stop loss to break-even. Which is the price at which you entered the trade. Once the trade was in profit another 20 pips you could move the stop loss up 20 more pips from your original entry price. This would guarantee that if the price came back the other way against your position and hit your stop loss, you would still have a profit of 20 pips. You can keep doing this for as long as you want if the trend is really strong.

No.4 – Stick To Your Forex Exit Strategy As Per Your Trading Plan

One of the biggest obstacles a trader faces is sticking to their pre defined trading plan. There were so many times when I started to trade that I didn’t stick to my plan. Especially when the trade was going in my favor. I soon realized how fast the market can be and quickly turned against me. I knew I should have put in my profit targets and should have exited the market with a profit. But my lack of discipline and experience took the better of me. What could have been a winner, turned into a looser because I didn’t put a stop-loss either.

This was a huge realization, which finally took my trading profits to the next level. I learned to trust my trade plan and follow it with discipline.