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When the forex trade is moving in your direction and has
moved at least ten pips in your favor then move your stop to break
even. Remember this is if you are day trading. Now when do you scale
in to the position? You should have a trading plan in place so if the
pair has moved thirty pips then its time to add to the position.
Traders can wait till it nears a support or resistance area and
start scaling in near these areas ,adding to the position when you see
it's holding. This is usually done if your not day trading and on
longer time frames. The currency pair may retest the trend line within
the next hour or two so you have time to add to your position.
Longer term positions make it easier to scale in to your
position. Day trading is harder due to the short time frames so you
need a trading plan and make sure to back test it if you decide to
scale into your positions.
Traders need to make sure they are using a trailing stop especially if
you are day trading. Adding to the position is good but you need to
close the position once it starts to turn against you.
Most forex traders that scale into their position will add half
the original amount of the trade. For example if you entered a 5000
lot order then you would scale in 2500 once the trade had moved thirty
pips in your favor. This would be done if your trading a longer term
time frame.
Entering a forex trade is not only important but you have to manage how
to take your profits and not get greedy. This is part of good money
management to increase your profits which is important.
The smart FX trader does not scale into a losing position hoping
that it will bounce back. You can also close part of the position when
it has moved into a profit area. There is nothing wrong with taking
some profits.
As the trade get closer to a support or resistance area then you can
close out the trade. lock in your profits and move on the next Forex
trade. Currency pairs will have support and resistance areas. These
levels are a great way to scale into or start taking your profits. |
