So now you have pulled the trigger and opened a position, and now you are in the forex market. Time to sit back and let the market do its thing, right? Not really. The forex market is not the role of the dice where you place your bets, and see the dice tumble, and simply take the results.
It is a powerful, fast-moving arena where new facts and price movements create new prospects and change earlier expectations.
We hope that you will follow our recommendations on always acting with a plan – indicate in advance where you should go and where you can close each transaction, both on a stop-loss and take-profit basis. Bottom line: you improve your overall chances of trading success (and minimize the risks) by systematically planning every transaction before you get caught up in the emotions and hype of the market.
Depending on the style of trading that you follow (in the short term versus medium to long term) and the general market conditions, depending on whether you are trending, you have more or less to do when managing an open position. If you follow a medium to longer-term strategy with generally wider stop-loss and take-profit limits, you may prefer to opt for the "Set it up and forget it" trade plan. But a lot can happen between the moment you open a transaction and prices that hit one of your trading levels, so it's always a good idea to stay at the top of the market, even for longer-term transactions.
Whichever trading style you follow, it always pays to keep up with market news and price developments as long as your transaction is open. Unexpected news can affect your position at any time. News is news; and you could not have planned it with regard to your trade plan, but for every news you may have to make changes to your trade plan at any time.
When we talk about making changes to the trading plan, we only mean reducing the overall risk of the transaction, by taking a profit (in whole or in part) or moving the stop loss towards the transaction. The idea is to be fluid and dynamic in only one direction: take a profit and reduce risks. Keep your original stopping place where you decided it should go before you entered the transaction.