Exit Forex Trading Transactions at the Best Price Levels

By: David Lloyd

Copyright (c) 2008 Forex Trading Alerts

We are going to cover what we regard as the most challenging part of Forex trading: - When to exit a Forex trade. In preceding articles in this series on no stop, hedged Forex trading we covered "Currency trading without stops" and "Currency trading not caring which way the price moves".

How often have you exited a Forex trade positively and then looked on as the price travelled another 100 pips in the same direction? How often have you watched as the price retraced all the way back to your entry or even beyond after you tried to squeeze the last 5 pips out of a good Forex deal? Knowing when to cash in a forex trade, one of the most challenging aspects of Forex trading.

When you enter a Forex trade all the trading signals are aligned and you can tick all entry criteria on your checklist. That is why the entry is the easy part. You are entering on your terms. When the price takes off in its intended direction it enters a mystery zone where you are dependent of the volatility of the move for the Forex transaction to succeed. You very seldom have reference points. When to cash in, or not, is always the question on every traders mind. The price tends to revisit previous support and resistance levels which makes this even more challenging.

Negative deals make things even worse. You are 30 pips down. Do you close the deal at a loss or do you wait for a small retracement to reduce your loss? Surely the price has gone as far as it can go?

It can't go more negative? Then the transaction goes even more negative. You start thinking: "I've lost so much another 20 pips can't hurt I'll give it more room". And so on. Many Forex traders can identify with this.

With Grid trading you don't have that problem. You would divide the expected trading range for a particular currency for the next say 6 months (say 4000 pips) into grid levels with gaps of say 200 pips. The guesswork of when to cash in your Forex deals has been eliminated. You cash in your positive deals every time the price touches a grid level. It is as simple as that. When the result of all your deals add up to a profit you would close them all and start again. How simple can trading be? No ifs, buts or maybe's. This is a reason why no Forex charts are required. You trade price levels, with no stops (Because each price level has a buy and sell active) and you don't care about which direction the price moves.

The question of when to enter a Forex trading transaction is also answerred. You would use the same price levels that you use to exit profitable deals (as determined above) as the entry levels for your no stop, hedged, Forex trading grid system strategy. The process of determining the price levels is very important as some trading groups are reporting gains of one thousand percent a year on capital employed using this Forex trading technique.

This is only one example of a way of finding a grid structure. As you will see in future articles grid levels can be designed to meet the trader's requirements in many more ways. For more information (which is freely available) on this great trading system why not search the web for "no stop Forex trading".

This is the third in a series of seven articles on the no stop, hedged, Forex trading technique which will be presented in this article directory on an ongoing basis. Make sure that you do not miss any of them.

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