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When to get out of a trade

  • #1
  • First Post: Jan 30, 2008 10:09pm Jan 30, 2008 10:09pm
I placed a recent trade in GBPJPY and EURJPY, (long in both)

Turns up that the trade went against me. I bought 2 lots of each and turned out that after the fall over past 24hours, I am facing a bit of loss. However, I still hanged on to the trade and now I have recovered a bit.

My question is for all the experienced traders that when in a situation like this, how do you know when to get out of the position?

DO you always put a stop loss? Since, given how volatile forex is, initial loss doesn't necessarily mean that the trade won't be in your favor in the end.
  • #2
  • Jan 30, 2008 10:13pm Jan 30, 2008 10:13pm
You are subscribed to the thread "roll over(carry trades) that can be used for 100% hit rates" by brijon. http://www.forexfactory.com/showthread.php?t=67211
  • #3
  • Jan 30, 2008 10:17pm Jan 30, 2008 10:17pm
BY 2 Lots i understand 2 Standard lots or 2 Mini Lots?

You should always have a Mind Set when taking a trade. that what would be my risk per trade and how much i am risking of my total Balance..

You should also have always set in mind, after how many pips i will book profits, no matter it goes more up or whatsoever.

If you see over 50 Pips against you, it means it could go further 40-50 pips more down..
So a tight stop around 50 pips is best.

And GBP/JPY is a way fast moving currency, it can eat you up in minutes or make you in minutes.
  • #4
  • Jan 30, 2008 10:18pm Jan 30, 2008 10:18pm
I did some study for EUR/JPY.
Dont worry we are in Bullish trend..
Until and unless 157.04 is not broken, be happy
  • #5
  • Jan 30, 2008 10:20pm Jan 30, 2008 10:20pm
very well said Mr Jacob
  • #6
  • Jan 30, 2008 10:21pm Jan 30, 2008 10:21pm
I always use a stop. I sometimes let it get hit, sometimes not.

The stop is far enough away so that normal movement will not take me out. It is far enough away to tell me I was wrong.

I size my position so that if this stop is hit, I will lose a prescribed amount, usually 1%, sometimes up to 2% of my account.

If it happens that the reasons I took the trade no longer exist, I may exit. If I see signals that would make me take a trade in the opposite direction, I will exit.

Beyond that, I would just be "hoping" it will turn around and go my way. I catch myself hoping sometimes. That's gambling, not trading.

In addition to hope, there is fear that the trade will go your way once you exit. You tend to remember the times it did when you're thinking of getting out. Wrong thinking. If the chart says exit, you exit.
  • #7
  • Jan 30, 2008 10:57pm Jan 30, 2008 10:57pm
Jacko's Antihedging strategy might be what you want.... "Jacko's house of forex pleasure and pain" thread.

No way to remove risk in trading (that I am aware of) so stops must be predetermined or you are risking blowing the account. Facts of life, I'm afraid.... Afterall, the market can continue against you (remember: it doesn't care what you are doing with your account)
  • #8
  • Jan 31, 2008 12:59am Jan 31, 2008 12:59am
even if the trend is up, we still can be wiped by the dip...
good luck,
  • #9
  • Jan 31, 2008 6:05pm Jan 31, 2008 6:05pm
Quoting blueruby
I always use a stop. I sometimes let it get hit, sometimes not.

The stop is far enough away so that normal movement will not take me out. It is far enough away to tell me I was wrong.

I size my position so that if this stop is hit, I will lose a prescribed amount, usually 1%, sometimes up to 2% of my account.

If it happens that the reasons I took the trade no longer exist, I may exit. If I see signals that would make me take a trade in the opposite direction, I will exit.

Beyond that, I would just be "hoping" it will turn around and go my way. I catch myself hoping sometimes. That's gambling, not trading.

In addition to hope, there is fear that the trade will go your way once you exit. You tend to remember the times it did when you're thinking of getting out. Wrong thinking. If the chart says exit, you exit.

Good one.

Really appreciate your feedback. Thanks.

I guess, somethings only come with experience....and not numbers or signals.
  • #10
  • Jan 31, 2008 8:32pm Jan 31, 2008 8:32pm
Quoting jacobtrader
I did some study for EUR/JPY.
Dont worry we are in Bullish trend..
Until and unless 157.04 is not broken, be happy



What kind of analysis leads you to this conclusion.....

Maybe because I'm relatively new but sometimes I have a bit of a hard time connecting the picture drawn from Fundamental Analysis with the picture from TA.

What else should on be researching on when tyring to dig into a currency pair?
  • #11
  • Jan 31, 2008 8:49pm Jan 31, 2008 8:49pm
You basic question is "when do I get out?" That should be decided BEFORE you enter. If you have a specific target you can use that or if you are riding a trend you can use the strategy of trailing your stop up as the trade progresses to lock in profit.

But if you are asking yourself, when do I get out when my trade has moved against me, that too should be PRE determined. You have many good replys in this arena. The bottom line is accept the risk in your trade BEFORE you enter or do not enter. If you think your trade just isn't producing what you thought it would, then exit and wait for another entry signal.

Your method of trading should have clearly defined entry/exit signals if it doesn't DONT TRADE until you have a method that does. The key point that all of this is about is, discipline. Have the courage to use your method and stick to it. If you entered a trade and its going against, you wait for the exit signal then exit. If the stop loss is triggered...GREAT! That's what its for...to prevent any further loss.

The only thing left to do is correctly size you positions so your losses are sustainable until you have a win. That means risk only 1-2% of your total account on any one trade. 1-2...not 10-15%. Don't trade 2 standard lots on a 10,000 mini account, unless you have a stop of 10 pips or less. Yes your returns will be smaller, at first, but so will your losses, and you will survive to trade next year, and the year after that...

Hope this helps
  • #12
  • Jan 31, 2008 9:02pm Jan 31, 2008 9:02pm
Quoting Svm
I placed a recent trade in GBPJPY and EURJPY, (long in both)

Turns up that the trade went against me. I bought 2 lots of each and turned out that after the fall over past 24hours, I am facing a bit of loss. However, I still hanged on to the trade and now I have recovered a bit.

My question is for all the experienced traders that when in a situation like this, how do you know when to get out of the position?

DO you always put a stop loss? Since, given how volatile forex is, initial loss doesn't necessarily mean that the trade won't be in your favor in the end.

Thats is the million dollar question..

1. since you are trading gbpjpy look at usdjpy also since they go in the same direction most of the time
2. I would hedge instead of stop loss (works best in ranging market since you can have double pleasure by profiting from both direction turning what would have been a stop loss into double profit) since the price will come back in ranging market

3 place stop loss far far away... but then you have to have a good reason to get into the trade to begin with (trend line? fibs? fundumental?) and so that will give you an idea where to place stop loss...far away ...although that will mess with your risk reward ratio...still your set up has good win /loose ratio (you know this from your back testing)

may the pips be with you
Pipology 101 student
  • #13
  • Jan 31, 2008 9:23pm Jan 31, 2008 9:23pm
Quoting Svm
I placed a recent trade in GBPJPY and EURJPY, (long in both)

Turns up that the trade went against me. I bought 2 lots of each and turned out that after the fall over past 24hours, I am facing a bit of loss. However, I still hanged on to the trade and now I have recovered a bit.

My question is for all the experienced traders that when in a situation like this, how do you know when to get out of the position?

DO you always put a stop loss? Since, given how volatile forex is, initial loss doesn't necessarily mean that the trade won't be in your favor in the end.
When do you get out of a trade?

When price tells you that your current view of the market’s direction is wrong. The question is, what told you to initiate the longs and has that changed. If in your mind you are saying that price is long as it does not go below this level ( note: this is a place on the charts that says price is now short, not I can only afford X amount or a set # of pips.)

If price violates that level then you have to ask your self is this a stop and reverse or is price now forming a consolidation and we need to change hats.

Before you enter the trade you need to have some idea of how far you expect the trade to go and how far can price go in the opposite direction and you still retain your current view of the market, that’s called risk vs. reward.

You can do the math, but if your winners are 50% then what kind of risk to reward ratio do you need to keep to be profitable… the rest is self-discipline.

Find a repeating profitable pattern, look for trade setups with that pattern that have a high enough R:R that when combined with setups winning % nets a profit and trade it.

a
  • #14
  • Feb 1, 2008 11:20am Feb 1, 2008 11:20am
It's hard to say, for scalpers, the first sign of volatility is when to get out, but if you are a scalper, then you shouldn't be in a volatile trade in the firstplace. I'd say get out when it doesn't reverse on the expected hunch on where it's going now.
  • #15
  • Feb 1, 2008 11:25am Feb 1, 2008 11:25am
if you're asking....IT'S NOW! CLOSE ITTTT!!!
  • #16
  • Feb 1, 2008 11:33am Feb 1, 2008 11:33am
Yeah, like i said, when the hunch doesn't work immediately.
  • #17
  • Feb 1, 2008 12:54pm Feb 1, 2008 12:54pm
Quoting Klaka
It's hard to say, for scalpers, the first sign of volatility is when to get out, but if you are a scalper, then you shouldn't be in a volatile trade in the firstplace. I'd say get out when it doesn't reverse on the expected hunch on where it's going now.
Why run from volatility? You can't make money when the chart looks like the EKG of a dead person.
  • #18
  • Feb 1, 2008 1:09pm Feb 1, 2008 1:09pm
buy when your pukin' sell when your dancin'
  • #19
  • Feb 4, 2008 12:00am Feb 4, 2008 12:00am
Quoting sbaker3232
buy when your pukin' sell when your dancin'

Ok,
All I gotta figure out now is when to puke and when to dance....
  • #20
  • Feb 4, 2008 12:23am Feb 4, 2008 12:23am
If you are new in this field.
I would say stop trading.. buy some technical related books, study them... practice.. understand all concepts. learn money management, and then come in this field.
Or with One Click your account will be gone..

And remember, dont be dishearten, Every single professional has lost an account, practices and practices and improves.

But my advice, if you dont understand TA with FA (Fundamental Analysis) and dont know when to buy or sell.. its better to read some books.. use different indictors, learn how to make trend lines, resistance and support, fiobannici and lots more.
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