Trade Exit
Cut your losses short and let your profits run. This is the essence of your trade exit rules.
Cutting losses short
A protective stop protects your trading capital, it is your initial trade risk. Before a trade is even entered your should know where your protective stop will be - this is your maximum loss (barring any slippage on the exit). There are many different ways to determine a protective stop on a trade:
Set dollar amount - Say $500 on every trade
Percentage retracement - Say 10% from the entry price
Volatility - A percentage of the average true range of the previous x bars
Moving Averages - the opposite of the moving average entry
Channel breakouts - the opposite of the channel breakout entry
Based on areas of support and resistance stops
Time - If a position is not in profit after a certain length of time then it is exited.
Letting profits run
An effective exit technique is also required to allow a successful trade to make the most profit possible and give back the least amount of it.
Usually a trailing stop is employed to achieve this objective. A trailing stop moves to lock in profits as the trade moves in the traders favour, it should never be moved backwards. There are many different ways to calculate a trailing stop:
Volatility - the stop is calculated as a percentage of the average true range of x periods.
Dollar - A set amount determined before the trade is entered.
channel breakout - exit a long position at the low of the last x bars.
moving average
chart patterns - ie move the trailing stop behind each consolidation as it forms.
Other forms of exit are:
Time Stops - A trade is exited after a certain length of time no mater what. A day trader, for example, will always exit at the market close.
Targets - A limit order is placed to exit a position at a pre-defined profit objective. However this tends to break the rule of letting profits run and usually reduces the profitability of a system by cutting short the best trades.
Tim Wreford runs Online Futures Trading, a website that provides information and resources for traders. Tim also provides a free day trading system, the results of which are updated daily on the site.
Latest News
Currency Trading Market Conditions Remain Challenging: Breakout ... Daily FX, NY - Sharp US Dollar gains have produced profits in several of our currency trading strategies on the week, and a continuation of US Dollar strength would make ... US Dollar Forecast to Rally Against Euro, British Pound, Fall ... |
![]() Voice of America | Treasury’s Lead Role in China in Flux New York Times, United States - Besides, some noted, China’s currency, by maintaining its peg to the dollar, has risen in relation to the currencies of other trading partners because the ... Yuan's Fall Watched Ahead of US-China Summit China hopes talks with US boost coordination Paulson Seeks to Broaden Access to China |
Stocks drubbed at open CNNMoney.com - US crude for January delivery tumbled $3.46 to $50.99 a barrel on the New York Mercantile Exchange. In currency trading, the dollar fell against the yen and ... |
Maktoob | Yen Strengthens as Manufacturing Slump Weakens Yuan, Ruble Bloomberg - Bank Rossii, which manages the currency against a basket of dollars and euros to mitigate the effect of currency swings, widened the ruble’s trading band to ... Dollar Rises as Global Manufacturing and Stock Markets Plunge Down Is Dollar's December Direction Yen Extends Gains as Signs of Global Recession Sap Carry Trade |
Yuan Falls to One-Month Low as China Seeks to Shore Up Economy Bloomberg - “The central bank may want to test the market’s response to the possibility of a weaker yuan, but most likely it will keep the currency stable till the end ... Yuan tumbles to end at bottom of band vs dollar Yuan posts record low against dollar Rate cut sees yuan decline |
![]() New York Times | Some Nations That Spurned the Euro Reconsider New York Times, United States - After turmoil in the currency markets nearly destroyed the currencies of Iceland and Poland, the two countries are rethinking their opposition to the euro. ... |
GLOBAL MARKETS-Grim economic outlook pummels stocks, oil slides guardian.co.uk, UK - ... also lifting the dollar, so it's possible the dollar will get a bit of a bid out of this, but currency trading is going to be choppy," Reid added. ... |
AU Preview: Q3 GDP Should be Bo... ForexTV.com, NY - Forex (or FX or off-exchange foreign currency futures and options) trading involves substantial risk of loss and is not suitable for every investor. ... |
Ruble Plunge Prompts Doubling of Reserve Spending, Survey Shows Bloomberg - Bank Rossii buys and sells foreign currency to keep the ruble within a trading band against a basket comprised 55 percent of dollars and rest in euros. ... Russian Stocks, Ruble Drop as Production Falls More Than in ’98 |
China's currency falls by record against US dollar MarketWatch - The yuan eased to 6.8848 against the dollar, falling to its 0.5% trading limit, its lowest level since May. Against the dollar, the Chinese currency was at ... Chinese market closes higher Manufacturing Contracted At The Fastest Pace In 25 Years During ... |
Resources
-
Simple Forex Solution.
eBook on Currency Trading.
-
Forex Trading Strategy
How to trade Currency pairs
-
Global Forex Currency Trading Portal
Global Forex Currency Trading Portal, Free Forex News, Research, Trading Systems, Strategies and Education
-
Forex Trading Tips - Learn how to trade EUR/USD, USD/CAD or any other major Currency pair.
Stock index Trading strategy for beginning and experienced traders alike.
-
Become a High Earning Currency Trader
Become A High Earning Currency Trader by Tapping a Few Buttons on your PC
-
Forex :: FXTrader.NET - The professional Forex Trader - Forex Managed Accounts for private and insti
Forex Managed Accounts Forex Currency Trading Services Forecast Products
-
Get Rich Trading E-Currency! Get The Free Ecurrency Report!
Instantly Cash In On Your Share Of This Multi Million Dollar Industry With Your Very Own, Shockingly Explosive Ecurrency Trading Business.
-
Currency Exchange Profits Video Training
Currency exchange profits | Video training for e-Currency Trading
-
Day Trade Forex System:
The ULTIMATE Step-by-Step Online Currency Trading Course
Day Trade Forex Systems: Online Currency Trading Course, Advanced Trading Signal System and the Euro Fractal Trading System. Forex traders using our forex advanced signal system with specific entry and exit strategies can win trade after trade in the for
-
Foriegn Currency Trading | Online Forex Trading | Forex Trading System
Online Forex Trading System Ebook

