I am going to reveal forex trade management strategies that will change the way you trade forex.
These simple techniques are aimed to minimize your losses and maximize your gains.
1. Trading Without Take Profit
Once you spotted the market that is trading in a strong bullish or bearish trend, there is one tip that will help you to benefit from the entire movement.
If the market is bullish, and you buy it expecting a bullish trend continuation, consider trading WITHOUT take profit.
Take a look at USDJPY on an hourly time frame.
The market is trading in the bullish trend, and we see a strong trend-following signal - a bullish breakout of a current resistance.
After the violation, the price went up by more than 1000 pips, and of course, trading with a fixed target, most likely you would close the trade too soon.
The same trade management strategy can be applied in a bearish trend.
Above is a price action on GBPUSD. The pair is very bearish, and we see a strong bearish signal on an hourly time frame.
The market dropped by more than 1000 pips then, and of course, trading with the fixed take profit, you would miss that bearish rally, closing the trade earlier.
Even though the trends do not last forever, the markets may easily fall or grow sharply for weeks or even months and this technique will help you to cash out from the entire movement.
2. Stop Loss to Breakeven
Once you open a trading position and the market starts going in the desired direction, there is a simple strategy that will help you to protect your position from a sudden reversal.
Above is the real trade that we took with my students in my trading academy. We spotted a very bearish pattern on USDCAD and opened short position.
Initially we were right, and the market was going to our target.
BUT because of the surprising release of negative Canadian fundamental news, the market reversed suddenly, not being able to reach the target.
And that could be a losing trade BUT we managed to save our money.
What we did: we moved our stop loss to entry level, or to breakeven, before the release of the fundamentals.
Trade was closed on entry level and we lost 0 dollars.
Moving stop loss to entry saved me tens of thousands of dollars.
It is one of the simplest trade management techniques that you must apply.
3. Trailing Stop Loss
Once you managed to catch a strong movement, do not keep your stop loss intact.
As we already discussed, your first step will be to protect your position and move your stop loss to entry.
But what you can do next, you can apply trailing stop loss.
Above is a trend-following trade that we took with my students on GBPCHF.
Once the market started moving in the desired direction, we moved stop loss to breakeven.
As the market kept setting new highs, we trailed the stop loss and set it below the supports based on new higher lows.
We kept trailing the stop loss till the market reached the target.
Application of a trailing stop will help you to protect your profits, in case of a sudden change in the market sentiment and reversal.
4. Partial Closing
The last tip can be applied for trading and investing.
Remember that once you correctly predicted a rally, you can book partial profits, once the price is approaching some important historical levels or ahead of important fundamental releases.
Imagine that you bought 1 Bitcoin for 17000$.
Once a bullish market started, you can sell the portion of your BTC, once the price reaches significant key levels.
For example, 0.2 BTC on each level.
With such trade management technique, you will book profits while remaining in your position.
Even though, these techniques are very simple, only the few apply them. Try these trade management strategies and increase your gains and avoid losses!
