The question I get the most by email concerns winning entries and exits. Apparently, a core belief of traders striving to succeed is the following:
“Having the perfect trading strategy is a necessity for successful trading.”
That couldn't be further from the truth!
The “optimal way” doesn't exist in trading because we cannot, as traders, predict the market and expect that the past will repeat itself.
Winning Entries And Exits In The Forex Market: An Overview
Now that we're on the same page, I wanted to offer some background on the different winning entries and exits that you can use as a Forex.
Winning Entries: Examples
Those aren't meant to be exactly what you must apply. Instead, I want to push you to think and to test for yourself what works best for your particular trading style.
Winning Exits: Examples
There are two main ways to exit the market I would be comfortable with:
- Fixed Take Profit based on a stop loss:
- Trailing Take Profit and/or Stop Loss: this applies a little more to trend trading as the price in a sideways market is likely to pull back to the entry point fairly often.
In addition to that, some trading strategies are based on a fixed pip amount exit. I'm not so sold on the idea but if that makes sense to you, go ahead. For instance, the book Day Trading and Swing Trading the Currency Market by Kathy Lien features some strategies using fix pip amount take-profits. Note that these trading strategies are specific to certain currency pairs.
Here's a video detailing the Forex trading exit strategies:
The Importance Of Testing These Techniques
While it might come to your mind that starting to use one of the techniques above will lead to more profit earlier, I want to stress the fact that nothing is worth trading unless you have validated it yourself. The successful traders interviewed on the Desire To Trade Podcast all have done their due diligence before beginning to strive in trading.
The truth is, testing builds confidence. It might require some time, but every second you spend testing & validating a Forex trading technique is well-spent.
What is your favorite entry technique in the Forex market? Have you tested different winning entries and exits? Comment below and let's keep the discussion alive!