According to the surveys made among the forex traders, what they find most difficult about trading is determining entry and exit points. Timing is an important factor, variable that directly influences the profit or loss of a position. Determination of entry and exit points is vital because even if we know what the value of a currency pair will be in the future, unless we have a clear conception of when that will happen, and where it will end, our knowledge is unlikely to bring us great profits.
Clearly, we need powerful strategies to help us calculate the best trigger values for a trade justified by careful and patient analysis. Learning to trade in the Forex market is hard work and needs to be treated like a business, the same as any other serious business. This requires large investment of time, mental discipline, energy and a cautious investment of cash until all of the necessary skills are acquired.
There are various methods that experienced currency traders use to determine the place to open and close positions. Of course while finding the best entry and exit point, your trading strategy plays a big role here. If you are trading on 4hour charts but you are aiming for 10-20 pips with tight stop loss, you will see that your stop loss is triggered before the price starts moving in your direction.
If you have good entry point, you will find it easily to determine your exit point. Technical analysis provides information on the best entry and exit points for a trade. On a chart, the trader can see where momentum is rising, a trend is forming, a price is dipping or other events are developing that show the best entry point and time for the most profitable trade. Some traders use channel lines that they draw to find suitable points. Some traders use resistance and support levels, some wait for retracement, some wait for a chart pattern to form. Overbought and oversold zones are another way to determine entry and exit points. Some traders use multiple moving averages and some use indicators such as trix and stochastics.
It is very important to know that profiting trades will go back to losses if we do not know when to exit. It is also important that you test your strategies and find the most suitable style for yourself. That is why experience is necessary.