This article looks the entry and exit rules in your forex Australia trading plan.
When you make the decision to enter the forex Australia trading market, you have to develop not only a business plan, but also a trading plan. This should include details on the currencies you intend trading, the charts you are going to make use, the indicators you will be using and the lot sizes you intend trading and for how long. You also need to add the rules that will apply to your entry and exit points.
Depending on your personality type, you may be an aggressive or a conservative trader. This personality trait is often a factor in the rules you determine for your entry into the market. Conservative traders often spend too much time confirming all the factors before they enter a trade. This often makes them miss out on good trading opportunities. On the other hand, an aggressive trader is often in a hurry to enter the market. They do not wait for much confirmation to enter. By determining suitable trade entry rules, you will provide a decisive and consistent manner of entering the market.
Triggers and trade filters go hand in hand when you create entry rules. The filters identify the conditions that have to be met for an entry point to occur. A trigger is the point that defines when you can enter a trade. This may be based on a range of conditions, from particular values to exceeding a price value. An example of a trade filter is that you set the price level that has been reached or passed and the chart levels that should be present. Once the conditions have been met, you can start looking for the trigger. For example, you could set a trigger that a long position should be entered with a stop limit order at a specific price level.
The trigger should specify the order type you will used to enter the trade. To ensure that you make use of the most appropriate order type, you should be aware of the different types of orders available to you.
Forex Australia Exit Rules
Many people believe that the price you enter a trade at is irrelevant as you can turn it into a profitable by exiting that trade at the right time. This may seem a bit too simple, but it can work. The success of your trades is very dependent on the exit points you use. This means that the trading rules for your exit points are as important as those for your entry points.
You need to define several outcomes and these could include:
- Your profit target
- The stop loss levels
- The trailing stop levels
- The duration for your order type
You should state the types of exit orders clearly in your trading plan. For example, you should state your profit target and your stop loss point. You should take care to cancel remaining orders as you do not want to be caught with an open order a month down the line and it is showing massive losses.
Your trading plan is your guide to success. It is vital that you implement it accurately and with discipline.