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Position Holding and Closing Strategies in Forex Trading

In forex trading, one crucial aspect is knowing the right timing to hold or close a position. This not only impacts our trading outcomes but also our consistency in achieving profits as expected. This article will discuss several strategies that can be employed to manage positions in forex trading.

Managing Profitable Positions

Even when our position has yielded profits, we often find ourselves torn between closing it or leaving it open to potentially gain more profits. However, it's important to adhere to established risk management rules and avoid overly greedy attitudes. We can consider locking in the profits we've gained by moving the stop loss to the breakeven level or above the latest high/low level.

Position Management in Trending Markets

Trending markets present opportune moments to reap larger profits. As an indicator, we can utilize the exponential moving average (EMA) 8 on the daily chart. If the price has crossed above the EMA 8 in line with the trend direction, we can move the stop loss to this level to protect our profits.

Position Management When the Trend Reverses or Approaches Support/Resistance Levels

In the event of a trend reversal or when the price approaches support/resistance levels, it's prudent to adjust the stop loss to be closer to these levels. This will help us protect the profits we've gained and mitigate the risk of losses.

Position Management for Pin Bars Indicating Trend Continuation

If bullish or bearish pin bars form within an ongoing trend, we may consider holding onto the position until other conditions indicate closing it. These pin bars signal that the trend is likely to continue, allowing us to capitalize on further profits.

Position Management in Different Market Conditions

Before deciding whether to hold or close a position, it's essential to observe the market conditions, whether it's trending or consolidating, and whether price movements are volatile or stable. If the market is trending, it's preferable to hold the position to maximize profits, whereas if the market is consolidating, it's better to exit at support/resistance levels.

It's crucial to always prioritize risk management and ensure that our trading decisions are based on logic rather than emotions. Each strategy above should be adjusted according to the predetermined risk/reward ratio before entering the market. By doing so, we can increase the likelihood of success in forex trading.

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