When or how to add to your position in forex trading is something you need to learn. It is not always possible to pick the perfect entry point in a forex pair. Once you have placed the trade you need to decide if you want to add to your position if the currency pairs are moving in the right direction. Most profitable FX traders do not add to a losing position but let the trade stop out. If you are day trading then a ten pip stop loss would be normal to use. When the forex trade is moving in your direction and has moved at least ten pips in your favor then move your stop to break even. Remember this is if you are day trading. Now when do you scale in to the position? You should have a trading plan in place so if the pair has moved thirty pips then its time to add to the position. Traders can wait till it nears a support or resistance area and start scaling in near these areas ,adding to the position when you see it's holding. This is usually done if your not day trading and on longer time frames. The currency pair may retest the trend line within the next hour or two so you have time to add to your position. Longer term positions make it easier to scale in to your position. Day trading is harder due to the short time frames so you need a trading plan and make sure to back test it if you decide to scale into your positions. Traders need to make sure they are using a trailing stop especially if you are day trading. Adding to the position is good but you need to close the position once it starts to turn against you. Learning to read price and its relationship to averages is a valuable skill that can be used in trading any market. Whether you trade stocks, Forex, or futures, reading price relationships is how traders profit. Convergence is described as when Price Action is generally following the same path as what we are seeing on our technical indicator. So, for example, in an uptrend where the market is making higher highs and higher lows, we would also be seeing signs of strength in our technical indicator of choice. This is a sign of continuing momentum in price and would suggest that a trend has a higher probability of continuation. The same would be said for a downtrend, too, but the market would be making lower lows and lower highs with weakness showing on the indicator, giving the trader clues that there is still momentum in the downside moves. Basically, Price and the Indicator are doing the same thing, or converging.Stock and Forex Trading Entries
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