When Should Traders Buy or Sell?
In order to better follow the tips above, it is always recommended that you have defined strategy. Figuring out when you will enter and exit a trade is a prerequisite before you open a live position. Randomly buying or selling a currency pair with no set plan is unlikely to be beneficial, and may well be more stressful. You also won't be able to assess your performance productively as you have no set rules. Only by identifying and sticking to a strategy can you hope to potentially achieve long-term success.
Learning when to buy and sell involves building your knowledge and experience. This expertise can be acquired, as in any task, by continuing to educate yourself. Traders need to be thoroughly understand the basics of trading the markets and constantly expand their knowledge. This also requires keeping up to date with the latest market news, and any political or economic announcements that could affect the outcome of your trades.
Trading in a nutshell is working out when something is overvalued or undervalued. Having a plan and method will help you determine this. If you can follow this over a long period of time, your chances of potential success increase.
Technical analysis can help you work out when to exit a trade. Perhaps there is some resistance or support level near the current market price which may see a reversal in the trend. There could also be a major upcoming risk event which might see a lot of volatility in the market. It could be wise to exit your trade before this, so you don't suffer any large losses.
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Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.