5 Top Tips on Trade Exit Strategies

Getting out of trades at the right time is one of the hardest parts of forex trading.

You can leave the market too late and lose some of your profit because you didn’t lock in any of your gains.

You can also get out of a trade before it’s done, missing out on possible gains if you had just let it run.

It is one of the most frustrating things for many traders to see on the charts. This can have a ripple effect on your trading, which could lead to you trading out of anger or greed and making bad decisions.

This is one of the best places to look if you want to increase your profits.

So, check out my five tips for getting out of a trade, and if you have any comments or questions, leave them at the end.

Maximum Favorable Excursion

Maximum Favorable Excursion (MFE) sounds like a lot, but adding it to your trading journal is one of the easiest things you can do. If you want to know more about MFE, you can read this article, which also has a free journal.

MFE basically looks at every trade you make and keeps track of how many pips of profit you lost.

It’s easy, but when you look at this information in relation to specific setups or pairs, it gives you a great goal to shoot for if you want to make more money.

This is also a great way to keep yourself motivated to keep up with your trading journal. If you look at your trading data, you can really learn a lot about how you trade. Don’t miss out on this chance!

Setting type

This one might seem like a no-brainer, but you’ll be surprised at how useful it is.

Trade setups are used in different situations, so they each have their own pros and cons. When you know what your profit goal should be for each trade, you can work with the setup’s strengths.

So, you know that extending your target on a reversal trade is riskier because you are going against the trend. With a reversal trade, you can be conservative with your target, but with a Breakout setup, you can’t.

With a Breakout trade, you take advantage of strong trends and momentum, so your target can be farther away than with a Reversal trade.

If you remember these basics for each trade, you’ll be able to trade more quickly and consistently. It will also help keep you from letting greed decide how you leave the game.

Is the trend a friend of yours?

Using trends to your advantage is a trading tip that is right out of the book.

We’ve all heard that “the trend is your friend,” but what happens when this friend leaves you on the side of the road and takes all your gains?

At some point, a trend has to end. They have always been and always will be.

The important thing is to look at certain levels to see if the trend will continue. Look at psyche levels and how prices have moved in the past to get a good idea of where prices might hit a barrier.

With your exit, it can be easy to convince yourself to keep holding and hope for 5RR, 6RR, or even higher. Don’t fall into that trap, because none of those gains are real profit.

So, let the trend be your friend, but be ready for it to break up with you, and I promise you won’t lose all of your trade’s profits.

Putting up strong support and opposition

Any price action trader who wants to be successful needs to know where support and resistance (SR) levels are. A key part of my strategy and many others, if you put them in the right places, you will end your trades better, there’s no doubt about it.

You should make it a habit to be able to spot price barriers and figure out how prices are moving around them.

If you practice putting your SR down, you will get better at it and feel better about yourself. You can practice by comparing my SR to yours right here. Every week or two, you should clean your charts and replace them with new SR before the trading week starts.

Price Changes Recently!

My last tip is something that seems obvious, but it is always the first thing I do when I trade, and it is the most important:

Look Left.

Price action can help you out. There is a lot of information you can look back on to help you make a better choice.

This ties together everything we’ve talked about so far: how you read price action affects your SR levels, it’s the basis of your analysis when looking for trends, and it tells you what kind of trade you’re looking at.

How to get out of a trade at the right time depends a lot on how well you understand how prices move.

Multiple days of not knowing what to do getting close to your goal? Maybe you should set a limit on how many indecision candles you can have before you get out of a trade.

You don’t have to memorize the names of the candles; you don’t need names to understand the story behind a candlestick.

So, those are my five tips to help you figure out how to get out of a trade. Share some of your best trading tips in the section below!

“If you don't find a way to make money while you sleep, you will work until you die.”

- Warren Buffett


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