Naturally, all traders know that you should set a limit order or at the very least include a decent profit aim or closing signal in your intention and keep to it. It’s really important not to keep a winning trade open until the instant ‘feels right’. Either you are aiming at a certain number of pips or you are waiting for something like an oversold or overbought signal and then close immediately.
There are several options for the positioning of the new stop and it is a good idea to back test these for your personal system. First option, if your stop was originally 20 pips out from your opening position, it now moves to 20 pips from the price at which you just closed half the order. 3rd option, the stop moves to half way between the opening price and the current price . What is best is dependent on the original position of your stop. Naturally you don’t want to move it so close to the current price that it is caused too quickly.
Equally, never be tempted to apply this method to a bad trade. It might be a gigantic mistake to only close 1/2 a trade when it hit your stop, unless you are testing different positions for the stop. Currency exchange techniques should maximize your profits, not your losses! .
Experience can make all the difference and you’d be smart to practice on a demo account before testing your methodology on the real market. They don’t consciously remember having seen a situation before, but long experience of watching and trading the markets gives them a deep knowledge that may often help them identify signals extremely fast. In fact, hardly any trader ever does this. You need to wait to be certain that a trend is forming. Similarly, don’t try to hold out until the last moment to try and grab each last pip. Set your profit target and be happy with it. In the long term this can pay you better than attempting to 2nd guess the market. Ultimately, don’t follow any kind of foreign exchange trading system that depends on changing your position size depending on whether your last trade was successful or unsuccessful. This is a recipe for disaster, as thousands of ruined gamblers have uncovered. If you’ve got a good system your profits will exceed your losses without turning to gambling. Investing time in your foreign exchange trading education is the secret to meaking money from the foreign exchange markets.