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Learn How to use the Best Price Levels to Exit your Forex Trading deals

In preceding articles in this series on no stop, hedged Forex trading we covered "Currency trading without stops" and "Currency trading not caring which way the price moves". Below we are going to cover what we regard as the most challenging part of Forex trading: - When to exit a Forex trade.

How often have you exited a Forex trade positively and then looked on as the price travelled another 100 pips in the same direction? Alternatively how often have you tried to squeeze the last 5 pips out of a good Forex deal and then watched as the price retraced all the way back to your entry or even beyond? Knowing when to cash in a forex trade, one of the most challenging aspects of Forex trading.

When you enter a Forex trade all the trading signals are aligned and you can tick all entry criteria on your checklist. That is why the entry is the easy part. You are entering on your terms. When the price takes off in its intended direction it enters a mystery zone where you are dependent of the volatility of the move for the Forex transaction to succeed. You very seldom have reference points. When to cash in, or not, is always the question on every traders mind. The price tends to revisit previous support and resistance levels which makes this even more challenging.

It gets worse on Forex trading deals that go negative. You are 30 pips down. Do you close the deal at a loss or do you wait for a small retracement to reduce your loss? Surely the price has gone as far as it can go?

It can't go more negative? Then the transaction goes even more negative. You start thinking: "I've lost so much another 20 pips can't hurt I'll give it more room". And so on. Many Forex traders can identify with this.

The problem is eliminated by grid trading. You would divide the expected trading range for a particular currency for the next say 6 months (say 4000 pips) into grid levels with gaps of say 200 pips. Now the guesswork of when to cash in your positive deals is taken away. You cash in your positive deals every time the price touches a grid level. It is as simple as that. As soon as the total of the deals you started with is positive, you close all your deals positively and start again. How simple can trading be? No ifs, buts or maybe's. That is why you don't need charts. You trade price levels, with no stops (Because each price level has a buy and sell active) and you don't care about which direction the price moves.

The question of when to enter a Forex trading transaction is also answerred. You would use exactly the same price levels that you use to exit profitable deals (as determined above) to enter new deals when using your no stop, hedged, Forex trading grid system strategy. The process of determining the price levels is very important as some trading groups are reporting gains of one thousand percent a year on capital employed using this Forex trading technique.

This is only one example of a way of finding a grid structure. As you will see in future articles grid levels can be designed to meet the trader's requirements in many more ways. For more information (which is freely available) on this great trading system why not search the web for "no stop Forex trading".

This article is part of a series of seven articles on the no stop, hedged, Forex trading technique which will be posted in this article directory on an ongoing basis. Make sure that you do not miss any of them.

Copyright (c) 2008 Forex Trading Alerts

Article Source: http://www.newagelivingarticles.com

Learn how you can make money from Forex Trading by tapping David Lloyd's experience by visiting Grid trading systems or contacting him at David Lloyd David and Mary McArthur have written a number of articles on the no stop, hedged, forex trading grid system.

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