BabyPips.com FX-Men Team
BabyPips.com
In forex trading, actively managing open positions is just as important as coming up with your plan. Here are three tips to help you manage your active trades.
1. Stay in touch with the market.
Whether you’re a hardcore technical or fundamentals trader, or maybe a little bit of each, you can’t deny that economic reports influence price action. This is why it pays to keep tabs on the events that pose risks to your trades.
Some say that the market’s reaction to the news is more important than the news itself. But how can you make the most out of a reaction if you have no idea about the news event?
Don’t forget to always pay attention to potential game-changers that might invalidate or at least divert from how you expect your trade to play out.
2. Be flexible with your trading plan.
If you have read the School of Pipsology then you should already know how important it is to be flexible with your trading plan. Of course, being “flexible” doesn’t mean being totally spontaneous and not following your initial plan at all. It just means that you’re making adjustments based on factors that have changed since you made your initial plan.
Being flexible requires you to constantly check the validity of your setups as time passes by. Also, keep in mind that the longer you keep your trade open, the more you expose it to different event risks. How long did you initially plan to keep your trade open? Is your setup still valid after a few hours, days, or even weeks?
Let’s say you spot a potential double top on AUD/USD as an intraday trade. You shorted at the “top” and wait for the price action to go down. But after a few trading sessions you see that the pair is just ranging near your entry level. Is your “double top” still valid, or should you take your profits early?
3. Update your orders and position sizes.
Just because you have the ideal reward-to-risk ratio and the “fool-proof” trading plan doesn’t mean that you shouldn’t also tweak your order levels and position sizes. Remember, you want to minimize your risk.
If one or two factors in your trading plan don’t go your way but you think your idea still has merit, you might want to cut back on your position sizes. On the other hand, if you find that the price action turned out to be better than what you expected, you could also consider adjusting your stop losses or taking partial profits. It would be a lot better if these adjustments are included in your initial trading plan in the first place, but better late than unprofitable, right?
Keep in mind these three simple tips when you trade so you don’t end up wasting your well-thought of trading plans. Before you know it, these practices will have already turned into habits!
1. Stay in touch with the market.
Whether you’re a hardcore technical or fundamentals trader, or maybe a little bit of each, you can’t deny that economic reports influence price action. This is why it pays to keep tabs on the events that pose risks to your trades.
Some say that the market’s reaction to the news is more important than the news itself. But how can you make the most out of a reaction if you have no idea about the news event?
Don’t forget to always pay attention to potential game-changers that might invalidate or at least divert from how you expect your trade to play out.
2. Be flexible with your trading plan.
If you have read the School of Pipsology then you should already know how important it is to be flexible with your trading plan. Of course, being “flexible” doesn’t mean being totally spontaneous and not following your initial plan at all. It just means that you’re making adjustments based on factors that have changed since you made your initial plan.
Being flexible requires you to constantly check the validity of your setups as time passes by. Also, keep in mind that the longer you keep your trade open, the more you expose it to different event risks. How long did you initially plan to keep your trade open? Is your setup still valid after a few hours, days, or even weeks?
Let’s say you spot a potential double top on AUD/USD as an intraday trade. You shorted at the “top” and wait for the price action to go down. But after a few trading sessions you see that the pair is just ranging near your entry level. Is your “double top” still valid, or should you take your profits early?
3. Update your orders and position sizes.
Just because you have the ideal reward-to-risk ratio and the “fool-proof” trading plan doesn’t mean that you shouldn’t also tweak your order levels and position sizes. Remember, you want to minimize your risk.
If one or two factors in your trading plan don’t go your way but you think your idea still has merit, you might want to cut back on your position sizes. On the other hand, if you find that the price action turned out to be better than what you expected, you could also consider adjusting your stop losses or taking partial profits. It would be a lot better if these adjustments are included in your initial trading plan in the first place, but better late than unprofitable, right?
Keep in mind these three simple tips when you trade so you don’t end up wasting your well-thought of trading plans. Before you know it, these practices will have already turned into habits!
BabyPips.com does not warrant or guarantee the accuracy, timeliness or completeness to its service or information it provides. BabyPips.com does not give, whatsoever, warranties, expressed or implied, to the results to be obtained by using its services or information it provided. Users are trading at their own risk and BabyPips.com shall not be responsible under any circumstances for the consequences of such activities. Babypips.com and its affiliates will not, in any event, be liable to users or any third parties for any consequential damages, however arising, including but not limited to damages caused by negligence whether such damages were foreseen or unforeseen.
Editors’ Picks
EUR/USD tests nine-day EMA support near 1.1850
EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1870 during the Asian hours on Friday. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming steady momentum. RSI has eased but remains above 50, indicating momentum remains constructive for the bulls.
GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus
The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.
USD/JPY rebounds above 153.00 ahead of US inflation data
USD/JPY stages a comeback and regains 153.00 in the Asian session, snapping a four-day losing streak amid some repositioning ahead of the US CPI report. However, expectations that Japan's PM Sanae Takaichi could be more fiscally responsible, along with bets that the BoJ will stick to its policy normalization path and the risk-off mood, could support the safe-haven Japanese Yen, capping the pair's upside.
Editors’ Picks
EUR/USD tests nine-day EMA support near 1.1850
EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1870 during the Asian hours on Friday. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming steady momentum. RSI has eased but remains above 50, indicating momentum remains constructive for the bulls.
Gold recovers swiftly from weekly low, climbs back closer to $5,000 ahead of US CPI
Gold regains positive traction during the Asian session on Friday and recovers a part of the previous day's heavy losses to the $4,878-4,877 region, or the weekly low. The commodity has now moved back closer to the $5,000 psychological mark as traders keenly await the release of the US consumer inflation figures for more cues about the Federal Reserve's policy path.
GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus
The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.
Solana: Mixed market sentiment caps recovery
Solana is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.