The profit-taking point is said to be a difficult factor in FX trading. Many people think that it is a waste not to take profit even though it is clearly unrealized profit now. However, in reality, when it comes to that situation, greed comes out and it becomes difficult to take profit.
Forex profit taking is difficult
It is said that profit taking in FX is difficult. This is because of the following reasons.
When there are unrealized gains, there are many people who want to make more profit and even pull it. However, the exchange market has a counteracting law, and once it goes, it often comes back. It is a world where there is no guarantee that unrealized gains will increase in the future, just because unrealized gains are on the market.
judgment is dulled
Many people hesitate to take profits because they think that the trend will continue for a while after the entry is clearly forward and the trend occurs. However, the trend is short-lived and often reverses in the exchange market.
Many people are worried about where to take profits when they are clearly going forward after entering. This is mostly the case where the profit taking point is not decided at the time of entry. Therefore, the end point is also blurred, and unrealized profit disappears without being able to take profit forever.
Chicken profit taking refers to taking profit when even a small amount of unrealized profit comes out. This is common for beginners and is not recommended. If you don’t win where you can, you’ll end up with a total loss when you lose. Beginners try to take profit as soon as there is even a small amount of unrealized profit, and endure it when there is an unrealized loss. Originally the opposite is correct.
How to make sure you take profit
As explained above, when you actually trade, you will end up in a situation where it is difficult to take profits due to the accumulation of unrealized gains. Is it possible to make a profit then? To do so, we recommend that you try the following methods.
risk reward ratio
There is an idea in trading called risk reward ratio. The risk reward ratio is often 1:2 or higher. For example, if you move 10 pips backward from the entry point, you cut losses, and if you move 20 pips forward, you take profit. By doing this, you can see a really good entry point. In addition, there is no risk of unreasonable unrealized loss, and you can avoid the situation where you can not make a profit even if unrealized profit is generated. Risk reward is often set at 1:2 or 1:3.
don’t look at the chart
One of the characteristics of those who can not take profit is that they are watching the chart all the time. This is by looking at the chart, greed comes out. In that case, you can set the profit taking point and the loss cut point in advance at the time of entry and make the settlement automatically. That way your emotions won’t control you. Of course, it is also good to grow even more after taking profit. But don’t feel sorry for this. Because this is common.
decide in advance
In the first place, you should decide the profit taking point and the withdrawal point when you enter. If you start trading without deciding on this, you will gradually lose track of where to settle, and there are many cases where the unrealized loss will increase and become fatal. If you don’t know, don’t enter in the first place.
Exness is for scalping
Exness is for scalping. This is because the spread is extremely narrow. Therefore, if you like scalping, please register with Exness and start trading. Since opening an account is free, please refer to the following article to open an account.