It is important to learn how to manage position when you are scalping. There are few important aspects:
Stop loss in Forex scalping
Cut yours loses quick. You will trade with bigger leverage so you can’t afford to have big loses. Hope is a false advisor. There is always the next trade.there is no 100% winning system and you have to accept that there will be losing trades. You have to learn when to close a trade so you can survive and stay in the game.
Moving stop loss higher (when in profit)
Simple and effective. With stop loss, you want to protect your money and do not lose too much. With Moving stop loss you want to protect your profit. You can keep it at a distance from the current price. The main idea is that when a price is moving in the direction you want and you are profitable then you move your stop loss.
Another very important concept. It takes time to master it, but I believe that it is worth a try. The idea is rather simple. We can divide it into steps:
- you open a trade and set stop loss
- when price moves in the direction you want and is some distance from the entry point then you move stop loss to the entry point
- if price moves more in the direction you want, you move stop loss even higher
That is very important. Thanks to that you are sure that in the worst case scenario you won’t lose any money. That is important for both your trading capital and psychic. It is never a good feeling to lose money. You can’t avoid it, but with avoiding loses with break-even you start to think more about money and position management.
That is opposite to situation when you are losing money and you hope that things will change. With break-even approach you start to realize that you are in control of your trading money and results.
Set take profit target
It is important to know where are possible support and resistance lines. This can help you to decide where is a good take profit target. You should remember that markets move very fast when they are close to these levels. That is why in so many cases it is better to close at specific take profit area than to wait for a signal which will lag.
Another great technique to protect your profits. Let’s say that you have a profitable long trade. It is still open and you are a good few pips in profit. You want to close it but there are an important resistance 15 pips ahead. Should you close all or move stop loss higher? Another solution is a partial close. There is an option to do that in Metatrader (other platforms too). It is simple. You just go to the options menu and close part of a trade. It doesn’t have to be equal – so you don’t have to close half or something. You can specify how much you want to close.
It is a great option.
Day trading and scalping guide - menu:
When you start:
- Forex scalping and day trading for beginners
- Best Forex broker for scalping and day trading
- Best Forex pairs for scalping and day trading
- News and economic data
- Scalping, day trading hours
- How many pips, how many pairs
- Leverage in forex scalping and day trading
- Money management
- Position management
- Time frames
- Trading capital
- Trading desk
- Forex scalping and day trading without indicators
- Day trading Bitcoin