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Exit Timing in Forex Trading
January 18th, 2011 by forexcityguy
This is a pretty overlooked topic when it comes to forex trading and seems very simple, exiting your trades, but timing it correctly could result in you having a really good month or a losing month. I mean this because your strategy could involve you entering 9/10 losing trades so long as that 1 winning trade far outweighs the 9 losers added together. Now factor in you exit a trade 50% too early, that could turn your 1 winning trade this month into a break even month when you could have been profitable. This is merely hypothesis, but we had a good discussion going on what it takes to exit a trade in forex in the most accurrate way.
Personally I love to use a Chandelier Stop indicator or trailing chandelier stop EA in MT4 to exit a trade. You can specifiy many settings for your chandelier stop that will enter you into trades and exit trades much quicker than a setting that would do it more slowly. In the preceding example you see 3 chandeliers on one chart at all different speeds alerting the trader to entries, but when the move is over, in this case is going down, when the chandelier turns green on all of these, its a good place to exit. It works for me constantly and is a great tool to have for any charting program. MT4 in fact has an EA that lets you walk away from a winning trade, set the Chandelier stop EA to a certain pip level, and if the trade goes against you for that amount, it exits you while you are still in positive territory!
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