The most common mistake that traders make in their career is they exit the market when the trend changes. It is a normal process that the trends will change and new trends will come. You do not need to close the trades for this reason. People think as soon as the favorable trend has ended, the new trend begins. There can be thousands of reasons for a new trend to come. It does not have to be a risk for your profit but you can still keep the trade open. This article will tell you why it is safe and also necessary to keep trades open in different changes.
Difference between retracement and trade change
Those who are completely new to the retail trading industry are always taking a huge risk to earn money from this market. But the risk takers can never make consistent profit from this market. Though the new traders in the United Kingdom managed to execute profitable trades most of the time yet they lose money. Do you know the exact reason for such loss? They are just closing their profitable trades too early. As a new investor, you need to stay in the market as long as you can. Let the winners run long and cut your losing trades early. If the market goes against you, try to identify whether it’s a trend change or minor retracement. If it’s a minor retracement your trade is still valid and you should stick to your plan.
Risk reward ratio
Finding high-risk reward trade setup is the most important thing in currency trading industry. When you are trading CFDs you have to deal with many losing trades. So if you always focus on big winners and embrace small loss, you are going to make a decent profit in the long run. Trade management skill is the most important thing in currency trading industry. Devote yourself and learn more about risk management factors. Never cut your winning trades early as it will ruin the risk-reward ratio of the setup.
It is the nature of Forex
The trend changes because it falls in the nature of trading industry of Forex. Forex is always evolving and many new trends are coming. People who have adapted themselves to the changes have survived and still trading and the others have lost their money. You cannot continue to make profits with the same trend for much longer. It will change because this is how the people make and lose their profit. The next time you see a change in the trend, never get afraid or pull out your trades. You have to place the trades with the strategy and proper planning so that they are not closed when the trend moves.
Some level of change in trend is accepted
Do not expect the Forex patterns to be fixed. The trends will change and there is some level. If you find they are changing at a rapid level, the industry might become volatile. Natural volatility is important for profit but a high level of volatility also indicates choppy market. In a choppy condition, the patterns get electrified and they change like winds. One moment they can be at the bottom of your chart and the next moment they will pierce the screen to get out of the chart. If the trend changes and it is accepted in your strategy, do not close the trades.
Early exit kills the plan
Every trade starts with uncertainty in Forex. You cannot say that your trade is going to win money as the trends do not have a pattern or nature. If you close your trades early to save your investment, you may lose your potential investment. Keep them open for as long as you can and you will find the trend has come in your favor. Many people find the trend changes after they have opened their trades.