Forex Strategy Video: When to Take Profit and When to Let Trades Run
• Many traders have taken profit too early and/or seen profitable trades turn into steep losses
• It is impossible to pick the optimal exit (just like the entry), so strategy is important
• I set my first target equal to risk, trail the stop on 2H, watch momentum and evaluate time frames
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What's worse: cutting a profitable trade off well before it has developed or holding on as a positive return turns into a substantial loss? These are issues that every trader must deal with; and just like our series of rules to initiate a trade, taking profit should be a matter of strategy. To make the evaluation more mechanical, I like to take profit on the first portion of my trade at an objective equal to the initial stop distance, trail stops on my remaining position when the first target is hit, set and manage stops commensurate with the time and distance a trade is set for, and regularly evaluate conditions for follow through. We will discuss all of these in today's Forex Strategy Video using two trades I recently booked: USDJPY and GBPNZD.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.