Time frame plays a vital role in successful forex trading. There is always a specific entry and exit time, which needs to be clearly understood by the traders. Before entering into the forex market, you must set your entry and exit point in trading. It requires you to have a proper plan of when to enter the market and what will be the best time to exit the market. Well, this planning is referred to as the Entry and exit strategy. Forex trading is a huge business that requires proper planning with strategies in place to show that you really want to grow your business.

Role of Entry and Exit Strategy in Forex

Traders should understand what existing points are available to them or learn how to create an entry that will help them to minimize losses and maximize profits. Entry strategy The main aim of using an entry and exit strategy is to make maximum profits from your trading experience.

A good entry strategy will help you to focus on managing your trades once you enter the market rather than on interpreting a number of indicators to work out the best time to buy. While using an entry strategy, traders should find out in which direction they feel that the forex market has a great chance of moving in. Now, the next step is to follow a technical analysis process, and after that choose a technical level, which you think is the highest entry point.

Once you select an entry-level or point, it’s time to position yourself in the forex market. Now, make use of several order types on the basis of the market condition and trend. It is not mandatory that all the entry points will be at the strategy in Forex. Exit strategy Obviously, there are only two possible ways in which a trader can come out of the trade; either by losing a trade or by making profits. When it comes to exit strategy, there are mainly two common terms used- take-profit and stop-loss that indicates the type of exit being made by the trader.

Stop-loss is an order that traders place with their brokers in order to sell equities in a specific period, or price. This process is done automatically. Once the traders reached at a specific point, the stop-loss will automatically change into a market order to sell. It will help them to minimize their risk ratio in trading if the market moves against them. Take-profit is also the same process as a stop-loss and there are the same rules followed in this part of the exit strategy. The only difference is that take-profit allows traders to get some profits in the trading.