Forex trading entry exit strategy

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Then you should find a shorter time frame. If the high and low time-frame instructions coincide, the entry point will be at the beginning of their joint movement. Price always moves in a curve. If the range of fluctuations is wide, so-called price channels with support and resistance levels are formed.

The optimal foreign exchange entry points are locations at these levels.


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The trader buys at the support level and sells at the resistance level. A good way to enter the market at the time of trend reversal. In the case of successful opening of transactions, we will find ourselves at the beginning of the emerging trend, having achieved maximum benefits due to the larger dimension of the price movement. Trend reversal is determined visually and with the help of indicators. There are also situations when there is a sudden reversal due to various fundamental aspects. Some merchants operate using news feeds. Foreign exchange is very sensitive to economic and political news.

During his release, Price makes a quick move. Economic news is the basis of fundamental analysis. When planning a trade, you have to answer a set of questions. These questions are the same each time, so writing them down and having them as a checklist is an excellent idea. Using structure as a level to exit a trade, is probably the most common exit strategy used by traders.

How to exit a trade

Those levels are also possible support and resistance areas on the chart. Due to that support or resistance possibility, we can never be sure if the market will keep moving through them or not. You must understand the market structure and know-how to read it. Otherwise, you may set some poor exit levels. We have a market that found support and reversed to the upside. The price did a strong surge breaking the previous high at point A.

The break to the upside is your reason to start looking to go long. So you decided to go long on the pullback or retest of the broken structure at A. Your trigger on that pullback is the bullish engulfing candle. Now you have the entry reason. But before you hit that buy button, you have to do some planning. I know you are anxious, and your fingers are itching to hit the buy button. Always decide your exit levels before you enter the trade. First out is the take profit level. Looking left, you see the significant swing high at point B.

The price moved down sharply from that level. Just before that swing high, the price bounced in the same area, which acted support as well. Based on those pieces of evidence, we can call it a possible trouble area, support, and resistance flip zone. Great, so now you have the exit target in place. What about the stop-loss? Right, that also needs to be in place ahead of entering the trade. In my trading course, I have a whole session just about stop-loss placement. So, for this example, we will use a simple strategy for that.

Set the SL below the low of the bullish engulfing candle and give it some buffer of extra pips. Now, if you have at least a risk to reward, you are good to go and hit that buy button. Leave it there, do not go to a lower time frame, do not mess with the trade! You did a great job so far! You planed the trade and followed the plan, now let the market do the rest. This exit strategy is an excellent cure for the sick of leaving money on the table. I can see your eyes wide open now, thinking about all those great trades that went way beyond your primary objective.

Active Exit Strategies

This time the market reaches that area of trouble and reverse at you. This keeps going on and on. The market does what it best at, making us confused. I will use the same market and TF as the chart above, to illustrate how the strategy will look like. Take a look at the chart below. You do the same plan as above, same entry reason and level, and the same SL placement. After closing half the position, you move your SL to breakeven or slightly in profit a couple of pips above your entry.

Forex Trade Exit Strategies

That way, you cover the spread if the market to turn on you and take you out. You made some profit, and you feel good about it and less stressed about the trade. After all, you banked some cash, and the rest of the trade is risk-free now. The fear factor should decrease dramatically. One of the best exit strategies for the trend follower is the Stop-Loss SL trailing since we can never be sure of how long a trend will last.

For this strategy, there are at least a couple of ways to play it. You either go with no targets at all, or you do what we did in the previous example, which is taking profit on half the position. To keep things simple, we will continue looking at the same chart as above. You took a long trade at significant support, and the trigger candle was a bullish engulfing. You plan to take off half profit at the previous major swing high, the same way as explained above — your SL at this point below the low of the bullish engulfing candle 1.

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