Building the Right Exit Strategy for Trading

One of the elemental parts of Forex trading in Indonesia is terminating a transaction. However, this is also considered by many as one of the hardest. Developing a successful exit strategy can be frustrating for many, especially the ones newer to this arena and with lesser exposure to the live scene. The concept of trade exit is given lesser significance and emphasis than it should be in the Forex learning stage. In this article, we’re going to be discussing the importance of an exit strategy in online trading, what makes it challenging, and some of the best ways to get it done.

What makes it challenging?

There is one principal reason for the difficulty people experience implementing their exit strategies: The general mentality is that an exit method is just an entry method, but applied in reverse. This is flawed and harmful thinking that leads people to miss the crucial elements of an exit plan. An exit and an entry strategy could be held as two completely different elements of the trading process.

Choosing the right method

Different traders utilize different methods with their exits, and there is no uniformity with this concept. One must tailor his methodology as per his style of working and preferences. When determining the method that you need to use, you must consider whether you envision long term or short term movements for profit making. Below are a few reliable strategies for exiting trades in the most efficient manner with optimal profits:

Strategy 1

In this strategy, you need to view the space between the trade entry and the stop loss zone as one component of risk. The profits that you would make would be on a scale built on this. For example, if you wish to make double the profit, then you set a profit target of 100 pips where the stop loss is at 50 pips.

Strategy 2

This approach represents a time-based exit system. Here, a trader decides to exit the trade that remains open after a designated period of time.

Strategy 3

This is a system based on areas of support and resistance. One would need to locate support/resistance zones with the use of graphs and then set targets for profit.

Strategy 4

When your trade is moving in a strong direction over which a clear trend line could be drawn, then watch out for breaks in the trend line and use them as indicators for exiting the position.

Conclusion:

A methodology for exit is a key component in a broad and comprehensive trading strategy. If you’re having trouble with developing your own unique exit plan, then avail the guidance of professionals in the field. WesternFX is among the leading Forex brokers for traders in Indonesia and the nearby region. Call us now to raise your bar in trading and enforce better strategies in the market.