Finance & Loans

Partial close technique in forex trading

In order to maximize profits on forex trading it is important to use a good exit strategy. Partial close strategy will enable you to preserve the profits you have made.

This allows you to close portions of your trade at different Take Profit levels instead of exiting the entire trade at one time. This will ensure a portion of the profits when trading is favorable.

For example a trader who has put a stop loss at 100 pips will be risking a total of 100 pips from that trade. If he makes a profit of 50 pips he might decide to close 50% of trading positions, whereby he would recover 50 out of the 100 pips risked. To maintain a 1:1 risk-reward ratio, the trader would have to close the remaining positions at a profit level higher than 100 pips as the remaining positions are traded with lower contract sizes.

It is a flexible method as it allows you to take profits and let the rest of the positions ride the trend. The worst case would be that the market trend would reverse and would meet the stop loss level, leaving you with a no win no loss situation.