Written by Emerging Market Capital FX (EMCFX.com)
There are several different trading strategies but using an effective exit strategy will make the difference on long term goals for trading and minimizing risks. Here are a few examples: discipline approach, trading on fundamentals, trading on technical analysis, buying/selling on market pressures and trend trading. All trading strategies do take discipline and learning each one does take time.
The discipline approach is having a trading strategy, an entry point, scaling, and exit point. Scaling is an advance technique using additional open positions and then closing the positions to take advantage of immediate small profit taking. With this style of approach, scaling can be used on all trading strategies but implementing this technique does take intense discipline.
There are several factors to be used with either fundamentals or technical analysis to base a favorable entry point. Using fundamentals requires reading and analyzing the economic indicators to see if the actual numbers beat the market expectations, thus causing the market to rally briefly. Using technical analysis requires following other professional technician’s indicators or indicators most commonly used by these expert technicians such as Fibonacci retracement, 200-day MVA, Slow Stochastic, Moving Average Convergence / Divergence to name a few. Deviating from these indicators and using other indicators that are not commonly used will lead to significant losses. Central Banks like Fed’s, BOJ, ECB, BOE, and other countries along with Large Institutions/Corporations, Bond Market (treasuries), Private Equity, Hedge Funds, Large Sovereign Buyers, Banks/Remittance, Clearing Houses, and Retailers use these indicators too.
Market pressures either over bought or over sold are signals to take advantage for immediate profit and this would be considered a exit point. Trading on market pressures can be rewarding and if used with a disciplined approach taking small profits can lead in the long run a larger gain. This approach is considered short term trading and does take discipline.
Finally trend trading is one of the easiest trading strategies but you don’t want to be on wrong side of the trend or this can lead to significant risks. Never go against the trend. Either good news or bad news the trend is always your friend. This approach is considered a profitable trading strategy if used correctly and this also does takes discipline to see a trend.
In summary, a discipline approach is having an entry point, scaling, and exit points. Using fundamentals by understanding economic indicators and analyzing technicals is a tool. Use market pressures for an exit strategy to take small profit. And, don’t go against the trend.
© 2010 EMCFX
About the Author
Mark Baker as one of the most dedicated and hard working independent providers of forex managed funds to individuals from low to high wealth portfolios. We offer transparent real time platforms for peace of mind. Emerging Market Capital FX (EMCFX) can be your alternative source for forex managed funds. Find out more about how to minimize your losses in your portfolio and regain your wealth at http://www.emcfx.com
