There are many sides to a Forex trade and the anatomy of one essentially consists of three phases; the start, the middle and the finish. During the start of the Forex trade, there are a number of things a person needs to watch for. In terms of personal involvement, the vast super majority of it will be during the start phase. This is when you should be watching for the signals that your strategy requires as well as when you should be looking out for any other opportunities that might arise from your observance. Once you have seen the activity that you are interested in and entered your trade, the start of the trade is effectively over.
The middle of the Forex trade is simply the trade resolving itself, hovering between the stop loss and profit objective points. The end part of the Forex trade occurs either when you voluntarily take the trade to an end or when it automatically comes to an end as a result of reaching either your stop loss or your profit objective goals. Sometimes however, the Forex trade itself goes on for a very long time before reaching your profit objective, if it ever reaches it at all. That point in a trade when the trade has been in profit for a very long time but alternatively has not been close to your profit objective is a very difficult time for a Forex trader and this article will help you deal with that sticky situation.
Analyzing the Situation
The first thing you need to do if a situation of sideways growth pops up is to analyze the situation rationally. By analyzing the situation rationally, what you are doing is looking at all of the different aspects of the trade and considering whether or not they make the case for pulling out of the trade with your current profit or waiting to see if you are able to get to your profit objective. There are a number of things you will want to take into account and these include:
The time the trade has been active.
The closest distance the trade has gotten to the profit objective.
The relationship between the current position of the trade and the closest point to the profit objective. Is the trade slowly creeping up towards the profit objective, or is it steadily creeping down?
The volatility of the trends. How much up and down movement is there in the trends at the current moment?
Your own situation. Are you tired, want to quit for the day, or do you still have energy left?
Making a Decision
It should be reasonably obvious what you should do depending on the factors that you took into account in the previous step. However, if you are still unsure and want to wait a little while before making a final decision, you should move your stop loss up to the break even point. This is something that many people forget to do and it turns an otherwise worse case scenario of breaking even into an out and out loss.