Closing Forex Market Trades (part 1)

The student of forex market trades, especially he who puts his knowledge into actual practice, is constantly evolving new ideas and making discoveries that modify his former methods. From each new elevation he enjoys a broader view; what were obstacles disappear; his problems gradually simplify.

We have previously defined tape reading as the art of determining the immediate trend of prices. If one can do this successfully in the majority of his forex market trades, his profits should roll up. But recognizing the trend and getting in at the right moment is only one-half of the business.

Knowing when to close your forex market trades, is just as important if not the most important part of a complete transaction. At a certain point in my forex market trades, I became aware that a large percentage of my losing forex market trades resulted from failure to close at the culmination of what I have termed the immediate trend.

An example will make this clear: New York Central was on a certain day the strongest forex market trades in a bull market that showed a tendency to react. The pressure was on Reading and Steel. My indications were all bullish, so I couldn't consistently sell either of the latter short. I was looking for an opportunity to buy.

The market began to slide off, Reading and Steel being the principal clubs with which the pounding was done. I watched them closely and the moment I saw that the selling of these two forex market trades had ceased, gave my order to buy New York Central, getting it at 137 1/4. It never touched there again, and in ten minutes was 139 bid for 5,000 shares.

Here I should have sold, as my buying indication was for that particular advance. Especially should I have sold when I saw the rise culminate in a spectacular bid, which looked like bait for outside buyers.

Of course the forex market trades might have gone higher The main trend for the day was upward. But for the time being 139 was the high point. I knew the forex market trades were due to react from this figure, and it did, but at the bottom of the normal reaction selling broke out in fresh quarters and the whole market came down heavily. The result was that my profit was only a fraction of what it ought to have been.

This is the way the forex market trades might have been made: I should have sold when 139 was noisily bid, and when the reaction had run its course, picked it up again, provided indications were still bullish. If they were not I would have been in the position of looking to get short instead of waiting for a chance to get out of my long.

There is a very wide difference in mental thought processes between the man who feels compelled to get out of something and one who has money to invest and is looking for a chance to make fresh forex market trades.

witness the spectacular rise in Union Pacific within a few sessions marking the end of the August1 1909, boom. After closing out forex market trades, the tape will tell on the following reaction whether you are justified in taking the same forex on again or whether some other issue will pay better.