How Long To Hold Out On A Position?

No matter what a trader’s skill and experience level is, the question on their minds is how long should they hold a position and where should they get out (exit). Getting out at the perfect moment is significantly harder than coming up with lucrative setups. It does not matter what kind of entry type you have or the trading system, the majority of trades can be completed or destroyed by exits.

The easy part is the entry, but that doesn’t mean you should enter into one unprepared. Experience has taught many traders that well-timed exists can make the difference between making good money and breaking even… even with a great trade.

Profit Targets

Profit target is the predetermined point to get out of a trade with profits to show for it. Profit targets are used in many trading techniques in order to manage the risk in different markets. In fast-changing Forex market setting profit targets is essential and makes a huge difference. Before a trade is considered, a trader needs to know where the profitable exit point is.

The benefits of setting profit targets before opening a trade are:

Securing profits before price reverses.
Don’t let emotions affect your trading decisions. Emotions can wreak havoc resulting in a huge loss.
Eliminating the need to constantly watch open trades.

The key in exiting a trade is to do it when you have a nice profit instead of waiting for the crash markets often take and you getting out due to fear. Now, there’s no reason to shut down the entire position when you get to the predetermined point. Instead, you can close a section off and have a stop loss in place for the rest to ensure you at least break even on the remaining part. This will secure the profit you make and still make money if a larger move occurs afterwards.

Once you’ve figured out where to put the stop loss, you need to put your attention on coming up with a logical profit target placement and the Risk/Reward. You want to be sure that there’s an acceptable Risk/Reward ratio for the trade. If not, then the risk isn’t worth it! How can you know if a risk is worth taking? You’ve got to come up with logical places where to put your stop loss and the profit target and see whether this trade is worth risk taking.

How precisely can you set your profit targets?

Well, pretty often we set our profit targets within just a few pips from price reversals. Just look at the charts of our last real-life trade below and notice how prices stumble and reverse at the preset Profit taking levels:

best forex signals aug11

This is not a coincidence. You will find plenty of similar trades in our blog. The techniques and methods that we use for predicting price reversal points are simple, straight forward and quite easily repeatable.