Forex Signals To Exit Trades

Posted by admin 29/10/2013 Comments are off 954 views

Forex Signals For Exit

This article covers the methods of determining suitable trade exit forex signals.

It is important for you to know the most suitable entry points for your trades, but you also need to know when to exit your trade.  There are basic rules you can follow to determine the most suitable point of exit as you do for your entry point.

Basic Tools

The basic rules are almost identical to that of your entry point signals.  You search for a trend and enter just before it commences.  Your basic exit forex signals are to search for signs of an end to the trend or the commencement of a new trend and leave as soon as you can.  The one main difference is that you are not searching for a new trend.  If you find a new identifiable trend that has already commenced and is huge, you are already too late.  What you should be doing is leaving the market as soon as you can clearly see that the trend you entered on is coming to an end.

Exit Point Forex Signals

You can commence with moving average crossovers.  If that is the system you used to identify your entry point, you are now looking for a reversal which will be indicated by a crossover which comes from above.  It is simpler for you to keep your eye on the change that occurs in the short-term moving average.  If it remains the same for a period of time, you can assume that the trend has more than likely ended.

The moving average convergence divergence and the average directional index both become more important in this instance.  You should search for stagnation or stabilization in both these signals as a sign that the trend has ended.  Some of the other popular forex signals to exit a trade you can make use of include momentum indicators, such as relative strength or smoothed rate of change.

You can make use of Fibonacci pivot points for this purpose.  Once the prices commence decline below the original trend lines and you notice a new pivot point pattern, you know that the trend has come to an end.  You should look for support or resistance in any pattern.  An alternative is to make use of 200 exponential moving averages.  The problem you may face here is that it is quite difficult to discern between a new trend and a retracement.  In this instance you should look to candlesticks.

News announcements are not a very good method to use as exit signals.  The problem is that your response to the news will normally be too late.  If you are able to read the market and you believe an event will have an effect on the market, you may be able to use it.  You will normally find that your stop-loss kicks in before you have the opportunity to do so.

The most important exit signal you can have is a stop-loss.  You should place stop-losses for every single trade you enter.  This is an easy method as you have found an exit signal the moment your stop-loss ends your trade.

The end of a trend is more difficult to discern than the commencement of one.  This means that you should know your analysis very well.

 

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