One of the biggest problems inexperienced Forex traders have is managing the trade when real money is on the line. Before the trade, they follow the trading system rules for entry and are calm and rational. But after the trade is placed, and real money is at risk, they let emotion take over. As a result, they often exit trades at times not based on the system, but out of emotions like fear and greed.
Imagine getting into a trade and going into profit. You are not at your take profit level, but you don’t want to lose the money you already see, so you exit the trade early. Or, let’s say the opposite happens, and the trade goes against you, so you exit the trade early before the stop is hit. In a lot of cases, price continues to your original price target, or turns around and goes profitable, which means you lost money by exiting early. In either case, you were not following your trading system, which is not a good thing. I’m going to go over three ways you can keep from letting emotion take over which makes you exit trades early.
In the first scenario, the Forex trading system you are using sets a stop loss and has one take profit level. So, you place the trade and set the stop loss and profit target in your trading station. The best thing to do now accepts the risk you have in the trade and let the trade play out one way or the other. Walk away from the computer if you must. At this point, watching the chart is valueless and will only lead to a roller-coaster ride of emotions. At this point, you should either walk away or go to other charts looking for other setups until the trade either hits your stop loss or hits your price target.
In the second case, let’s say you are using a system where you place the stop, but your exit target is defined by something that happens on the chart, as a signal in the opposite direction. In this case, you need to watch the charts see when to exit, so you can’t just walk away from the computer. In this case, I would click on the Terminal Window so it goes away and you can’t see the pipes or money in the trade. This way you can make decisions based on just what you see on the chart, without having your profits tempt you to exit early.
In the third case, you are using a Forex trading system where you set your initial stop loss, but you plan on moving your top and taking partial profits at predetermined levels. There is a lot of management for this type of trade. To make this easy and keep emotions out, you can use a Trade Management EA, which does everything for you on autopilot. At this point, just let the Trade Management EA take care of the trade management and walk away from the chart.