Closing orders when trading Forex

Many novice traders are mistaken in thinking that the main point of Forex trading is only the search for entry points into the market; it is equally important to hold an already open position and close all open orders on time.

Closing orders sometimes plays a decisive role, since timely exit from the market allows you to get maximum profit and avoid losses.

It is precisely obtaining the maximum profit from one position that is the main indicator of effective trading, since often the number of unprofitable positions is greater than the number of profitable ones and it is necessary to cover the amount of total losses.

There are several options with which you can complete the transaction, the choice of the most suitable one depends on the strategy you used.

We will be talking specifically about profitable options, so we will not touch upon the description of how stop loss works; in this case, the order is closed at a loss, with the exception of some options when this stop order is manually transferred to the break-even zone.

1. Take profit is one of the most commonly used, but far from the most profitable, ways to close a Forex order. This order value is set immediately when opening a new order. Technically, this is usually straightforward, but not every trader can calculate it correctly.

The key when calculating the take-profit is to find the optimal value that maximizes profit without exposing yourself to risk. After all, if you set an excessively large value, the price may simply not reach the trigger point and reverse.

Therefore, we calculate the take-profit size based on the trend dynamics. If the price has reached a certain level several times during the trading time frame, then this level is used as the basis. The order value is set slightly below this level.

Another option is to forecast the near-term trend. If you're confident the price will move at least 50 pips in the chosen direction, set the take profit to the same value.

2. Trailing stop – a rarely used, but most profitable, order closing option. Its use allows you to maximize your profit from a single price move. Essentially, it's a floating stop loss that follows the price and is triggered only when the trend reverses.

The only requirement for its use is trading on medium- and long-term timeframes, as it is technically impossible to set a trailing stop closer than 15 points to the current price.

This means that this order will constantly follow the price if it is moving in the right direction. However, if a trend reversal occurs and the movement is more than 15 points against the open position, the order is triggered and the position is closed.

For example, if you opened a trade and set a trailing stop at 20 pips, and the profit was 30 pips, the trailing stop would move and lock in 10 pips of the 30 pips, and so on. If the profit was 50 pips, you're guaranteed to take home 30.

If desired, the order can be closed before the stop order is triggered.

3. Manually closing orders – it would seem that nothing could be simpler: you make a profit and close the trade. However, the question of how much profit can be made from a single trade and when exactly to close an open position always remains a key one.

You should immediately determine the profit and loss level at which you will definitely close all orders. But an even better approach is to close orders at market price, meaning when the position finally stops generating profit.