Managing Trades: The Difference Between Winning and Losing?

Filed under: Learn Forex Trading |

There are many elements that you have to get right if you want to be a successful and profitable trader. The element that most beginners focus on is the entry, but studies have been done which show you can be profitable by having a random entry if you manage the trade well. Therefore, for today’s forex-related article, I want to focus on what you can do once a trade is in play.

 

Now to begin with, unless you are very experienced and constantly watch your trades as they unfold, you should have automated stop losses. These stop losses should be decided upon before you enter a trade, and you should never make your stops wider once the trade is on (although you can move them up and lock some profits in).

 

Another thing you should think about before entering a trade is what your target is. You may have several target levels and do some profit taking along the way, or you could just have one target. Your final target should have a positive risk-reward ratio, and this means your target should be, at a very minimum, two times that of your risk.

 

If you trade using candlestick charts, then each completed candle tells you something about what is happening in the market. For example, if a doji forms, which tells us that there is indecision in the market, then we might move our stops up or take partial profits. You can react to the market and make decisions while the trade is in play. But if you do this, you have to have very good control of your emotions. An alternative could be to use an automated trailing stop that will lock profits in as the trade moves in your favor.  Whatever you choose to do, managing your trade is as important, if not more important than your entry – so you would do well to put more of your focus on this.

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