Continued from Part II
7- Let the profits run and cut losses short. The latter point was mentioned under bullet 3 by using protective stops. In addition, progressive stops can be quite useful, if placed at strategic levels. A strategic level could be a support, a previous pullback etc. Exits are very important as they decide whether you make money or not. Some traders use pre-determined exit points at some levels like previous peaks, lows or support resistance lines. Some even use exotic Fibonacci levels for that matter. I personally look at strength, meaning how the price behaves at certain pre-determined levels and react accordingly. This prevents early exits and works for me. The drawback is that you may lose some extra pips, if you are wrong.
8-Know your time frame of trading. It makes things much easier and avoids unnecessary stress. You shall stick to a certain time frame, let’s say 15min or 1hr. If you are a scalper, you may even go for 1min or tick charts. Use lower time frames to support your decisions for your entries and exits, but do not solely react upon them. The lower time frames may be telling but they do not necessarily reflect the entire picture.
9- Finally, always follow the trend. Trends are channels which the market price follows. If the market is not trending then it is said to be consolidating. According to studies, most of the time (about 70%) markets consolidate. Even when they consolidate, the prices tend to follow channels, which means price going back and forth within ranges, which are called flags, pennants, triangles etc. It is more difficult to manage your positions during consolidation periods. Always check the trends of larger time frames and watch for smaller timeframe trends within that larger time frame. The most profitable gains occur at those positions.
Regards and good trades
7- Let the profits run and cut losses short. The latter point was mentioned under bullet 3 by using protective stops. In addition, progressive stops can be quite useful, if placed at strategic levels. A strategic level could be a support, a previous pullback etc. Exits are very important as they decide whether you make money or not. Some traders use pre-determined exit points at some levels like previous peaks, lows or support resistance lines. Some even use exotic Fibonacci levels for that matter. I personally look at strength, meaning how the price behaves at certain pre-determined levels and react accordingly. This prevents early exits and works for me. The drawback is that you may lose some extra pips, if you are wrong.
8-Know your time frame of trading. It makes things much easier and avoids unnecessary stress. You shall stick to a certain time frame, let’s say 15min or 1hr. If you are a scalper, you may even go for 1min or tick charts. Use lower time frames to support your decisions for your entries and exits, but do not solely react upon them. The lower time frames may be telling but they do not necessarily reflect the entire picture.
9- Finally, always follow the trend. Trends are channels which the market price follows. If the market is not trending then it is said to be consolidating. According to studies, most of the time (about 70%) markets consolidate. Even when they consolidate, the prices tend to follow channels, which means price going back and forth within ranges, which are called flags, pennants, triangles etc. It is more difficult to manage your positions during consolidation periods. Always check the trends of larger time frames and watch for smaller timeframe trends within that larger time frame. The most profitable gains occur at those positions.
Regards and good trades
