The exit strategy is important thing in your forex trading. The first thing dealt under the topic was forex entry point strategy. Then trade management was dealt, and if you are not aware of money management, then you should read forex money management. When you have read money management and entry in trading, you are ready to go through the final part in forex trading, the exit strategy.
Pivot Points of Forex Exit Strategy
When is the profit to be taken away? The forex trading market is quite unstable. For this reason I make use of pivot points in order to sort my plan for the profits well in advance. The Limit Forex Price for forex exit is possible to be placed for both selling and buying trade. The position of this limit price is near one pivot point. Consider a chart that displays 15 minute chart time frame for an entire day. It consists of three trade signals.
While the first is a signal for selling and it takes place just under the M3 pivot point. P, the main pivot point is the target for this forex trade, and it was reached just beyond 1.15 hours, which accounts to 5 candles of 15 minutes.
The second forex trade takes place near M3 and on top of the main forex pivot point. Hence, I set R1, the next forex pivot point resistance as the buy trade target. And, it was reached around 1.30 hours afterwards.
The chart shows the third signal, which is a sell signal taking place later on, amid M5 and R2. R1 was the target and it reached after a few hours. It cannot be seen on the chart. This is the way pivot points are used by me to position the limit price of my forex exit, and no speculation whatsoever is involved. The pivot points are already identified during the previous day’s trade closing, which means that they would be known in advance. This is a great help that can be used to your advantage.
Using MACD for Forex Exit Strategy
The exit strategy can be reinforced with the use of MACD Histogram, MACD and Signal Line. Check the chart where 40, 50, 20 have been used as the settings and find out how MACD can be helpful in the exit strategy. There are 3 more trading signals on the chart.
The first buy signal took place amid P, the main pivot point and the other pivot point M2. M3, the trade target was reached after a few candles.
The second trade, which is a sell signal, takes place amid P and M3 pivot points. When you check the MACD indicator, you would find that this trade is not established, and the MACD histogram continues to be positive with the MACD being on top of the signal line.
And, this way I remain away from the false sell signal. And, it took a few candles more for the next bug signal to take place amid R1 and M3, and the limit price for forex exit being at M4. This price target also was reached.
Initial Stop Loss for Forex Exit Strategy
As a forex trader, the beginning stop loss acts as your cover. You can limit your loss by using this exit strategy. A successful trader is recognized by the small losses that he makes. Hence, your objective should be to maintain your beginning stop loss as found on the chart. Make sure that you don’t alter your beginning stop loss.
Using Forex and Oil Trends for Predicting Direction of Market
In this article you fill find the tools that help you monitor the direction of the market. It involves the evaluation of different trends that are linked, and that take place amid various asset markets. It also sheds light on pointing the signals for alterations that let you to forecast the market direction. Specifically, you will find information on the usage of forex trends for telling the trends in stock markets.
Graham Summer has mentioned in his latest article, Stocks: Always the Last to ‘Get It’, that trends in Forex, especially in the case of main safe currencies such as the US Dollar and in bond give the best indication about stock prices.
I have been indicating this for a long time, and this has been reiterated by him. He confirmed by claim that a trader or investor in stocks should closely monitor the Forex market trends and he should comprehend what the performance of some currency pairs and currencies indicate about the sentiment of the market with relation to risk assets such as stocks. It would come as a surprise to you that this can be done by you in just a minute.
The following basic points will help you to make use of trends in commodities and forex in order to forecast stocks direction.
Over time the inter-market relationships change
The key asset classes have effect on each other. The direction and magnitude of the effect alters over a period. For instance, once the US dollar moved in the direction where stocks moved, but now its direction is opposite.
S&P 500 Chart on top of them all
It is agreed, as mentioned by Mr. Summers that in recent times, forex has come to become the main pointer for stocks, on everyday basis, stocks are followed by forex. The fact is that there is a lot of uncertainty between the most well-known commentators regarding the relationship of cause effect amid forex and stocks. Certainly, there are instances where stocks are moved by forex, but in general cases, the direction of forex is set by stocks.
This happens only on everyday basis, and it should not be taken that forex trends can’t control stocks over the long-term. It does happen, and the same also happens for oil.
Participants in Stock or Bond Markets should follow Forex Trends
The trends in forex can particularly give signs of risk sentiment shifts prior to stocks. The reason is that forex markets are highly receptive to political, economic and international ups and downs, and also on the capital flow. The reaction is also instant and gets affected for longer periods.
For instance, check out the way the EUR/USD chart released warning and pullbacks began on 4th December. At the same time S&P 500 started is on 21st January. It should be noted that the forces influencing both are difference, which reasons for the difference in timing. Lots of spending data and jobs affected EUR/USD in the beginning of December. However, the S&P was gaining at this time, which explains the variations, even though it was not more than month of warning.