Day #3 How to Open Sell Trade For Profit?

Day 3

When do trader enter the market to open sell trade?

In Day #1, we have learned how to read the forex chart, and we can identify the 3 phases of the market namely: Up trend, Down trend and Sideway trend.

Most trader will enter sell trade using downward trendlines and support/resistance lines as follow:

· Using the downward trendline: enter sell trade after the price closed at, below or around the trendline.

· Using Support/Resistance lines: enter sell trade after the price closed at, above or around the resistance line.

How to open Sell trade to profit?

When a trader believe that the price of the currency is going down, he can open a sell trade to try to profit from the move. He will first sell the currency at a higher price and then buy it back at a lower price, thus profiting from the difference.

How can trader protect their open sell trade position?

For protection and to reduce trading risk, trader usually use a stop loss price to exit from the open sell trade. If the market turned against him and price move in the opposite direction and hit the stop loss price, the open sell position will be closed at the predetermine price, thus minimising the risk (refer to chart below).

Opening sell trade for profit:

Most trader when opening sell trade, usually also set a predetermine take profit price beside setting the stop loss price. When the trader is right in the direction of the trade, and when the currency price hit the predetermine take profit price, the open sell trade will be closed for a profit.

The take profit price is usually the price set at 2 times the risk. Meaning, if the trader is risking 50 basis points (stop losses) for the open trade, he will be looking for 2 times profit which is 100 basis points. This is to ensure that in the long run he will be profitable even if he is right for only 30% of the time! This is money management, if you are interested, you can research to find out more.

 How to place open sell trade order?

Refer to the MT4 broker order panel above, input the correct currency, decide the trading lot size(volume), input the Entry, Stop Loss Price and Take Profit Price, then choose “instant Execution”. Finally choose “Sell” to place the order. The order will be executed immediate at the current market price (refer to the chart above).

Summary:

Trader using predetermined stop loss and take profit price can “Set and Forget” the trade. The trader will either be right and be rewarded with the take profit; or if he is wrong, the trade will be closed at a loss. Thus. This strategy is very suitable for newbies and traders who don’t want to “monitor” the trade by constantly looking at the price.

Guys, that’s all for Day #3. I hope you have learned something here.

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Happy Investing!

Turtle Investing Team