Many traders understand that the most challenging thing about successful forex trading is deciding when to close a position. Known as a forex exit strategy, it is probably the most frustrating and challenging part of trading.
When to profit in the Forex market is a very complex topic, and it does not have a correct answer. Your way to benefit will be different from someone else’s. It mostly comes down to your trading style and time frame.
Close a position at the next support or resistance level
A very popular way to profit from a prosperous trade is to place an order to secure a position when the next support or resistance level is reached. It is very simple, as long as you understand the supporting resistance. Of course, the theory on this is that the security will be able to avoid any errors that the Forex market may produce by rippling along its course.
Crossover trading strategy
Moving average crossovers also serve as profit-taking signals for some traders. This tends to be long-term traders’ favorite as it is a trend-following system. This approach allows large areas to move in the Forex market, allowing you to stay in the trade for extended periods. Depending on the time frame that you are using, this can last months or even years, believe it or not.
Recognize candlestick pattern
Candlestick recognition is another method of technical analysis that will let you profit at specific points. It is usually used in combination with support and resistance, as the two disciplines work very well. For example, if you are long on a particular currency pair and see a shooting star, this is a sign that the trade may start to work against you. Combined with a severe resistance zone, this gives you two solid reasons to consider exiting the trade. Conversely, if you are short on a currency pair and see hammer candles, this could be a trade that is all about working against you. It is especially true when the support is in the same area.
Close trade at the end of the day
Another common and effortless way to make a profit is by closing the trade at the end of the trading day. Day traders do this every day to sleep at night without worrying that the trade will work against them.