It’s been said by many professional FX Traders that where you get out of a trade is more important than where you get in. Obviously the entry point is critical, but your exit strategy is the difference between having a long career in FX trading or a very short one. The primary reason is that if you pick a random place to exit or use emotions to “get out” when “it feels right” you have absolutely no way to objectively measuring the accuracy of your trading plan.

As FX Traders we are always trying to get an edge in our pursuit of increased profitability. We study the charts and look for those setups that get us really excited. We have our risk management in place, proper position sizing and we have a target, that if met, will generate a nice reward:ratio that over time will make a generous amount of pips. We’re well on our way to a profitable career as a Currency Trader. We’re all set....

As FX traders we are always trying to optimize our trading plan to improve overall profitability and consistency. We gain an edge when we put the odds in our favor by increasing our batting average (win loss %) and increasing our average pips on a winning trade while decreasing our average pips on a losing trade. When we decide to place a trade, most traders have a risk and trade management strategy that includes an entry point; and a predetermined stop loss and exit strategy. Where I see the most traders struggle, is with picking the right pair based on relative strength and weakness (which I will discuss in a future article) and the proper position sizing for different currency pairs.

You’ve heard the phrase “ Defense wins Championships”. Let me tell you why these three words can save your career as a FX trader. Why become another statistic whose bad decisions cost them the passion of their life. The best and most successful traders adhere to these basics tenets: cut your losses, let your winners run and trade the market in front of you, not what you think or want it to be. All great talking points but I would submit that the hardest or most difficult decision to make is how to manage your risk or just how do you cut your losses. Especially when you “know” it’s going up or down. Sound familiar?