Knowing when to enter, and when to exit, a Forex trade can separate good traders from average traders. Scalpers are normally best at this as knowing when a trend is turning is kind of like second nature to us, although scalping is a risky strategy and not good for the novice.
Pressing that release profit/loss button can be the hardest thing to do for some traders as their natural reaction would be to hold on to gain more or hold on to see if their loss comes back into profit.
Keep the following tips in mind in order to enter and exit the market at the right times:
1 - Keep Market Open in Mind
There are always price flurries when the New York, London, and Tokyo markets open, and the greatest action is the overlap between New York and London trading hours. The greatest volatility tends to take place in the New York-London overlap. This time window is a dangerous one to enter a trade unless you have a specific scalping strategy. Less advanced Forex traders who are willing to wait several hours or more should enter trades when the major markets are closed and take advantage of the subsequent volatility to make their pips.
2 - Target Profits and Losses
A huge part of Forex success is having an idea of how many pips you'll be happy with, and how many pips you can afford to lose. Sometimes, entering or exiting the market isn't the problem; it's not knowing where your profit and loss parameters are set that can cause real anxiety. Long-term Forex traders don't try to squeeze every pip out of a position. Use your trailing stop-loss order to take money off the table. By the same token, resist the temptation to keep doubling down on losing trades; employ stop loss orders and get out to trade another day.
3 - Work with Your Charts
Different trading systems have different recommendations for when to exit a trade. Whether you go with a system, or come up with your own hypotheses, you need to look at charts to find the swings and points of resistance that give you closes about when to enter or exit a trade. If the chart is showing regular 80-pip swings in both directions, you'll want to enter a trade at either end of the swing, think about taking profit at around 80 pips, and set your stop loss accordingly. Use the forex indicators provided by your trading platform to make clear and accurate decisions such as Simple Moving Averages or SMAs to filter out price noise and ATRs to help measure trader enthusiasm in volatile trading sessions.
4 - Don't Be Emotional
Perhaps the most important tip of all for entering or exiting the Forex market is: Don't be emotional. If you're getting into a trade, or getting out of one, because of a strong urge that isn't backed up by data or a hypothesis, you're taking a major risk. Your entry and exit points need to be determined by whatever system you're working with, not your gut. Remember, if you personalize a trade, you are not trading.