Plan Your Entry and Exit before Entering the Market for Short Term Trade

Remember the cardinal rule for Forex trading is that “if you enter in to a deal to too early the chances for getting stopped due to phoney signals are higher.” “If you enter a trade too late there is a high probability of market reversal.” It is essential to plan ahead of entry.

Forex Strategy : Planning for Entry:

When planning for the timing and your entry mode, there are two techniques that can be used. One is by using the trend line and the other involves the Moving Average Convergence Divergence (MACD) Indicator.

While using the trend lines as an indicator for entry you need to look for trend line breaks, and enter a trade through a trend line break. If you fail to enter your trade at the break then, in such a case you need to wait for the market to recover and then refresh the trend line to check for a break to re-enter your position.

The MACD Indicator is also used to study the trend and the trend breaks through its histogram. The MACD histogram comprises of bars showing the activity, whenever the histogram bars invert to the other side that means the market is on its path of recovery and you can enter the trade.

Forex Strategy : Planning for Exit:

Planning an exit strategy is equally as important as an entry strategy, for an exit strategy you can make the use of Support and Resistance points with pivot points. Pivot points are generated through calculating yesterdays: Opening point value, The High value, The Low value and the Closing point value. Values from these points are computed in a formula to yield pivot points, do not go through the hassle of calculating these manually, there are countless pivot point calculators on the web. Remember that the longer time period you chose the longer you will have to stay in the market. If the market pauses at a pivot point and you have an oversold indicator then that is your alarm for exit.