Forex: position squaring at the right time

This article contains a very important (in the author's opinion) factor in trading in general and forex in particular - managing orders and positions. This includes choosing entry points, making decisions about exit points, stop losses and take profits. I hope this article will help new traders, just starting out in Forex, as well as experienced traders who are trading regularly and losing their money.

When I started trading Forex and made my first big loss and profit, I began to notice important things about the entire trading process. While the correct timing of the entry position was rarely a problem for myself (almost 80% of my positions went into the "green" profit zone), the hidden problem was determining the correct exit pips. Not just using stop-loss orders to cut my risk in a potential loss, but to limit my greed and gain as much as I could when I could. There are many well-known guides and ways to help get to the right point at the right time - like major economic data releases, global events, a combination of technical indicators, etc. But when entering an order is optional, traders can decide the best possible entry/bad entry points and timing as they wish, which is impossible if we discuss position squaring. Margin trading makes it impossible to wait too long. Moreover, every position somehow limits the trader's ability to trade.

IFforeign exchange marketNot so messy and volatile, choosing good exit pips will be an easy task. In my opinion (supported by my trading experience) for every position squaring should combine timing and the emergence of new market data (technical and fundamental).

Let's say you open a short order at EUR/USD1.2563, and the support/resistance level is 2500/1.2620 when you open the position. You set your stop loss order to 1.2625 and take profit order to 1.2505. So now, this position can be considered to be in one day or 2-3 days. This means you have to position squaring before the end of the "period" or it will become an unpredictable position (because the market will be very different from when you enter the market). When opening the position and setting the exit order, you need to track market events and technical indicators to adjust your exit order. The most important rule is to tighten the stop loss/take profit limit over time. Usually if I open a mid-term position (2-4 days) I will lower my stop loss and target order by 10-25 points per day. I also monitor global events and try to lower my stop loss when major data can hurt my position. If the profit is already quite high, I will remove my stop loss and set a guaranteed profitable position. The main idea here is to find a balance between greed and caution. But as your position becomes longer, the profit should be more limited. Also, traders should always remember that if the market starts to move in the opposite direction, they should be more careful with exit orders, promptly if the position is still profitable.

Every trader has their own trading strategies and habits. I hope this article will enable readers to think about an important aspect of trading and improve their trading results.