Managing Trades

When you get open a trade, you have to know how to accurately manage it. If you don’t know when to get out, it doesn’t matter when you get in. You could choose to handle this situation in one of many different ways. This should be handled according to the rules that you set forth in your trading plan. You have a trading plan, right? You don’t? This could be a problem.

In all seriousness, you do need some kind of plan to govern your actions as a trader. If you are trading a commercial system, it will typically have a specific plan that tells you when to get in and out of a trade. With this type of system, you set a take profit and stoploss level as soon as you get into a trade. With this type of system, you really don’t have to do anything special once you open the trade. You simply let the trade hit profit or hit loss.

If you trade your own system, come up with a specific trading plan that helps you make decisions. For example, in your plan, you may determine that after you make 50 pips on a trade, you take profit. Regardless of what you decide, just stick to your plan and give it time to see if it works.

Another way that you could potentially choose to manage your trades is with a trailing stoploss. With this approach, you said that stoploss to move with the price as it goes into profit. For example, if you set a stop loss of 30 pips, the stoploss will always go to within 30 pips of the market price. This means that if the market moves quickly, you’ll lock in some of your profits. If the market reverses, it will close out the trade once it hits this stoploss.

Money Management

Another area of management that you need to master is money management. If you do not use the proper money management, you might end up risking too much on a particular trade and then blowing out your account. Most experts recommend that you risk no more than 1 to 3 percent of your account balance. To do this, you will need to determine what lot size you need to trade with, based on the stop loss you use.

To do this, you can use a Forex calculator that we outline in this article about Forex money management

Considerations

If you want to be successful in the Forex market, you need to become familiar with both of these areas of Forex management. It doesn’t matter how good your system is at picking entry points, you have to know when to get out also. Otherwise, all those Forex pips you thought you had are really someone else’s. Your Forex broker probably offers Forex demo accounts. If you are a rookie, try out these principles on a demo account until you are comfortable with how they work. Once you master the management of a Forex trade, you will be ready for anything the market throws at you.