FX TECHNICAL ANALYSIS manage r i sk by trai l ing my
stops to lock in prof it and make sure I don’t lose more than a cer tain amount of money, or to put my stops in the right places in the fi rst place once I open a trade.
Managing positions is a vital part of trading and without it I would not be a profitable trader.
Methodologies There
are many di f ferent
trading styles. For example some people prefer to trade very short time frames, whi le others trade daily and monthly time frames. Personal ly, I have two strategies . One which i s a longer term strategy in which I am in trading positions for months and another one which is
a short time frame strategy,
which I use primarily for the index future’s market. For both I manage stop losses ver y careful ly.
There are a number of technical ana lysis tools to manage stop losses
including suppor t charts , and
resistance, trendlines, moving averages, key market numbers in the market , ATR measures , Ichimoku
market prof i le char t s, or point and
Figure 1 Trailing a stop using support and resistance and trendlines.
Figure 2: Trailing a stop using a Moving Average figure char t s .
Suppor t and resi stance and trendlines work very similarly, what you have to do is plot levels in the market that have been respected in the past and mark trends
careful ly either
up or down and fol low the trades with a trai ling stop loss either long or short and keep moving stop losses to higher or
low level s as the market moves in your favour.
Figure 1 shows three ci rcled examples of how you can trai l a stop in a trend using support and resistance and trendl ines.
Mov ing ave r a g es are a ve r y us e f u l tool when the ma rke t i s in a s trong t rend and they can he lp identi fy the s e t rends eas i ly. My favour i t e moving averages are the 55 EMA and the 10 0 SMA on the longer time frame cha r t s and the 21 EMA for the
56 FX TRADER MAGAZINE April - June 2016
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