In the given article I would like to consider one of the most important, in my opinion, aspects of trade in general and in the forex market in particular – management of warrants and items. It includes a choice of the trader of entry points, decision-making on points of an exit to installation of stop warrants and limits-warrants.
I hope that it will help as the beginners, only beginning to work in the market and to skilled traders who regularly trade either loses money in the market.
When I have started to trade in the forex market and did my first big losses and profits, I have started to notice very important things concerning trading process.
While personally for me the input in an item during correct time did not constitute special complexities (almost 80 % of all my opened items left in a profitable zone), the problem consisted in definition of a correct point of an exit for already open position.
For me it was important not only to reduce my risk of potential losses by means of installation of stop warrants, but also to limit the greed that it is duly to take reasonable profit. There is a set of known methods of an input in perspective items during correct time, like issue of the basic news, key world events, a combination of technical indicators etc.
However, besides, that the input in item is discrete – the trader can decide to drop so much good/bad entry points, how much he wishes, it is impossible to tell about an exit from an item. Marginal trade deprives of us possibility to wait too long with an open position. It is more than that, each open position to some extent limits trading possibilities of the trader.
The choice of good points of an exit for a trading item could become a problem if the market was not so chaotic and changeable. Proceeding from my experience, the warrant on an exit for each item should be corrected constantly in due course and in connection with occurrence new market given (technical and fundamental).
Let’s tell, you have opened a short item on steam EUR/USD at the price of 1.2563. While you have concluded this bargain, support/resistance levels was on marks 1.2500 and 1.2620 accordingly. You have established the stop warrant in the order 1.2625 and your purpose on profit is equal 1.2505. So, now it is possible to consider this item intra-day, or 2-3 day item.
It means that you should close an item before there is its “term” and it becomes very unpredictable item (because the market will differ considerably from what it was when you concluded this bargain). After the bargain initial warrants of an exit are concluded and established, you should monitor market events and technical indicators to adapt the warrants on an exit.
The most important rule consists in narrowing restrictions of losses/profits as passes time. Usually, if I conclude an intermediate term item (2-4 days) I try to lower level of the stop warrant and the purpose on profit on 10-25 items every day.
Also I trace global events, trying to lower my stop warrants when very important news can do much harm to my items. If the current profit on an item is already enough powerful, I try to move my stop warrant on an entry point, ensuring myself the guaranteed break-even.
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