Traders often screw up the process of profit-taking due to emotion, not having a profit-taking plan, or simply not knowing how to read the changing price dynamics of the market. I will also discuss some of the common mistakes that traders make in trying to take profit out of the market. A fact of Forex trading is that most traders take their profits as a result of an emotional impulse instead of exiting the market at a pre-determined target or from a pre-planned exit strategy.

As a result, traders who exit a trade on emotion typically take much smaller profits than they would like, while traders who exit a trade based on logic and discipline typically are very happy with the profits they take.

There is also an element of being realistic here that I need to touch on before going into the examples below. You see, struggling traders who exit emotionally tend to think they are going to somehow squeeze every last pip out of a move and this causes them to have difficulty closing a trade that has moved into a nice profit.

Look at the British pound vs. From the chart example above we can take away a very important point and build it into our Forex trading plan:. When we get up 1: How many times have you manually exited a trade only because it moved against you a little bit and then it rockets on in your favor? Or how many times have you manually exited a trade around breakeven only because you were afraid it would turn into a loss, only to see it turn around and take off in your favor while you were on the sidelines?

You need to understand that you never know for sure what will happen next, you have to trust your trading edge and then let the market play itself out. Forex trading is a game of risk and reward, and since there is risk involved with every trade you take, you need to accept that risk and look at it as the price of being a trader, and embrace it.

If we have a high-probability trading edge like price action Forex strategies , we need to let our edge play out over a large series of trades to see it work for us properly. When you manually close a trade just because it moves against you a little bit, you voluntarily interfere with your trading edge. So, you need to give yourself a chance on every trade you take by letting the market play itself out.

The best course of action is almost always to set and forget your trades and either take the loss from the risk that you accepted prior to taking the trade, or take a nice profit if the trade moves in your favor. A strong trending market provides us with the best opportunity to hit some big winners by letting our trades run via trailing our stops. There is no perfect way to trail your stop loss, and I do get a lot of emails asking me how to trail stops. Here is one example of trailing your stop loss by using the 8 and 21 daily EMA support layer in the current uptrend of the AUDUSD.

Taking profit in a range-bound market is pretty straight forward.

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Typically, you can watch for price action setups at one boundary of the trading range and then take profit near the other boundary of the range. See this example chart for more:.

FOREX Strategy: How to set your take-profit - ForexBoat Trading Academy

I get a lot of emails about how to know when to take a 1: But, generally speaking, in strong trending markets we obviously have a better chance of getting a big winner through letting our trade run by trailing our stop. So, knowing when to take the 1: Also, there is nothing wrong with moving your stop up to lock in a 1: How becoming a master price action trader will help you take more profit from your trades.

Becoming a master price action trader by learning to trade like a sniper and not a machine gunner , will allow you to identify high-probability price action entries as well as build your market analysis skills. Knowing how to effectively analyze the price action and current market structure prior to entering a trade is paramount to figuring out the best and most logical way to exit the trade.

While there are no guarantees in trading, one thing that can be said with certainty is that learning how to correctly read and trade off the raw price dynamics in the market will significantly improve your ability to both enter and exit the market effectively.

If you want to learn more about learning to read and trade with price action analysis, check out my Price Action Forex trading course. My major challenge was thus your insightful lesson. But afterwards the trade will continue in my direction. Your good article now has giving me good advice. Thanks for that Nial. Thank you so much! And written just for me EXITS in FX are everything…: I have been trading for several years now and have eventually reached the stage where I can make consistent profits.

From my own experience I fully agree with all you say in this article. It also teaches you that stop losses are absolutely essential and when to take profits besides much more. Anyway good luck to everyone!! I was winning 2: My stop loss was hit yesterday.

This is a key lesson right here.

Most traders have an idea of when to get into a trade but once they are in the trade they have a hard time taking profits because either fear or greed will start to cloud their judgement which leads to inconsistent profits. Glad you touched on this subject Nial! Looking for the next opportunity.

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Taking profits on emotion vs. From the chart example above we can take away a very important point and build it into our Forex trading plan: Let the market take you out How many times have you manually exited a trade only because it moved against you a little bit and then it rockets on in your favor? How to take profit in a trending market A strong trending market provides us with the best opportunity to hit some big winners by letting our trades run via trailing our stops.

How to take profit in a range-bound market Taking profit in a range-bound market is pretty straight forward. See this example chart for more: How to know when to take a 1: How becoming a master price action trader will help you take more profit from your trades Becoming a master price action trader by learning to trade like a sniper and not a machine gunner , will allow you to identify high-probability price action entries as well as build your market analysis skills.

Now I want to hear from you! February 12, at 6: February 12, at 2: February 11, at February 11, at 9: February 11, at 3: February 11, at 2: February 11, at 7: February 11, at 4: February 10, at February 10, at 9: Why You Should Take the Profits and Run!

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