By: Adrian Friggieri

Following on yesterday’s article where we have discussed the correct use of an appropriate Forex exit strategy as part of our trading plan today we shall continue to expand on the subject and on how to use at its best an exit strategy. We shall start discussing the actual Forex exit strategy tools available to the retail trader and any options we might have in order to use the Forex market steam before actually going out of the Forex market.

Use a Take Profit Limit (TP)

This can sound basic but I have seen a huge amount of retail traders that do not set a take profit (TP) limit, usually they would argue that if the market moves in their favor fast than they would lose the ultimate big trade. That is absolutely not true and not a decent argument at all. First of all if you open a position you should be in front of your computer to monitor the price action of the open trade and the indicators should be front of you in order to know if and when to exit the open position. Apart from that you would be monitoring if you actually should move the take profit or stop loss accordingly as the trade develops and the market moves.

So usually that is a ‘greed’ factor or better an excuse to cover the greed factor that can get you to collect nothing as the market might move to your take profit and retrace back or even worse you might exit the market out of fear and panic much before your target is reached. This with unjustified exit planning or Forex exit strategies in place.

So make correct use of take profit limits and let the trade run to the goal you took time to analyze before opening the trade if the indicators do not show signs of any reversal. Needless to say when your open trade reaches a decent profit do move the stop loss to breakeven, this would at least give you a free ride ticket if the market retraces back against you. Remember a breakeven trade is a winner too because you should have learnt something at no cost to your trading capital.

I do suggest you move your stop loss as the market moves and even close partial profits once a take profit limit is reached and if the trend is still steaming then you can leave part of the trade open and with a breakeven stop loss. Should there be a sign of reversal at the take profit limit than you would close all the position not to lose your pips. Like this you are a winner all the way whatever the market circumstances might be.