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Nial Fuller

NIAL FULLER Nial Fuller
Professional Trader, Author & Coach

Know When to Hold ’em – Know When to Fold ’em

One of the most challenging decisions that Forex traders are faced with on a day to day basis is…knowing when to hold on to a trade and when to close it.

online-trading This decision is usually the one that gives traders the most difficulty and frustration, and it is something that you must learn to effectively deal with if you want to make consistent money in the forex market. Trade management is often the area that gives forex traders the most trouble; it is relatively easy to get into a profitable trade but it is much harder to manage that profitable trade in such a way that it produces an outcome you are satisfied with.

This article will only focus on one area of the process of trade management; knowing when to hold on to a winning trade in order to let your profits run, and knowing when to close a winning trade and take your money. Pardon the cliché, but as the Kenny Rogers song goes, “You’ve got to know when to hold em’, and know when to fold em”…(If you never heard the song click here: Kenny Rogers)

How to manage a trade with a big open profit…

While there are certainly worse problems to have in the world, trying to figure out what you should do with a trade that is deep in profit can actually be quite puzzling for many forex traders. The problem that traders in this situation face is whether they should hold their trade for an even larger gain that may or may not materialize, or close the trade out and walk away with a very nice profit.

What this decision really comes down to is one of logic vs. emotion. Take a look at the technical picture of the chart that you are trading while completely disregarding how much money you are up or how you feel. When you look at the chart from this perspective think about how big the recent move has been that you have traded, how much has price moved compared to the ATR (average true range)? Do you really believe there is a logical technical reason that such a large move will continue on in your direction before reversing, or are you just being greedy? Remember that just because a trade is heavily in your favor does not mean you should necessarily keep it open. If you are in a trade that is up more than 3 or 4 times your risk, you should really stop to ask yourself, “Do I really believe this trade will keep going up or down in a straight line or is it more likely to experience a correction?” It usually makes more sense to lock in most of your profit or close a trade out that is deep in profit, because if there is one thing we can all agree on about the forex market it’s that it ebbs and flows and doesn’t travel in a straight line for very long except on rare times of economic volatility.

Here is an example of the point above illustrated in the daily GBPJPY daily chart from mid – 2010…

Another example….

How to manage a winning trade in trending markets…

Trending markets can increase the odds of a trade moving in your favor and as a result the chances of being able to let your profits run into bigger gains. One good way to tell whether or not you should try and let your profits run when a market is trending is whether or not new highs (in an uptrend) or new lows (in a downtrend) are being made on near daily basis. If this is happening you can simply trail your stop loss along the 8 day ema or slightly above / below the previous day’s high or low and let the trade run in your favor until it reverses and hits your stop.

Here is an example of the above point illustrated in the recent EURUSD bullish move on the daily chart…

Another example…

 How to manage a winning trade in the midst of opposing price action or support / resistance level…

Another factor you want to look for when trying to decide if you should hold your winning trade or fold it is whether or not there is an opposing price action signal or a nearby support or resistance level. A nearby opposing price action reversal signal or strong support or resistance level can be a good reason to close out a winning trade. Also, if there is a previous support or resistance level that has held strong in the past, you might want to use this level for a profit target, usually putting your target just in front of the level works better than trying to squeeze every last pip out by putting your target right at the level or slightly beyond it.

Just as we can use price action signals to enter into high probability trades, we can also use the opposite signal to exit a trade. How many times have you been in a pin bar trade and then after a day or two an opposing pin bar forms? In this case you might want to trail up your stop to just above the high or below the low of the opposing pin bar, depending on which direction you are trading. Opposing price action signals can be used to exit a profitable trade if they occur in the natural course of that trade, however, you should not wait or depend on such an opposing signal to exit a profitable trade, it is just something to be on the lookout for in case you are in a profitable trade.

Here is an example of the above point illustrated on the daily GBPJPY chart:

Another example…

How to manage a winning trade when reaffirming price action occurs…

One of the best signs that a particular trade is a good candidate to be held instead of folded is reaffirming price action. For example, if you are long the market and you get a bullish pin bar or consecutive bullish pin bars that form in the context of the uptrend you are trading you can be reassured by this price action because it “agrees” with the direction you are trading. This is essentially the opposite of the “opposing price action” rule that we discussed in the point above. This reaffirming price action can be a very good indicator that you should hold a winning trade instead of folding it. Learning to “read” a price chart in this discretionary manner is really what distinguishes the pros from the amateurs.

Here is an example of the above point illustrated on the AUDJPY daily chart…

Another example…

How to manage a winning trade in different market conditions…

Another factor to take into consideration when deciding whether to hold or fold your winning trade is the current state of the market. Is the market trending or consolidating, quiet or volatile? In a strong trend you will likely have a better chance to hold a trade for bigger gains, in a consolidating market you are probably better off using support and resistance levels and / or opposing price action signals to exit your trade. It is crucial that you consider what condition the market that you are trading is in before deciding whether or not to exit your trade.

Here are examples of managing a winning trade in a trending market on the daily USDJPY chart and an example of managing a winning trade in a consolidating market on the daily GBPJPY chart:

Don’t count your money when you’re sitting at the table…

When deciding whether to hold or fold your trade it is important that you look at your trade in terms of risk to reward instead of the amount of pips you are up. This is analogous to not counting your money when you’re sitting at the table; don’t count your pips when you are in a trade but instead calculate your risk to reward scenario. Before entering any trade it is very important to figure out how much reward you can reasonably make relative to the amount you are risking. As the trade progresses it is important to remember your pre-defined risk / reward scenario, you really don’t want to take anything less than this pre-defined risk / reward amount unless there is a logical reason to do so like one of the points we discussed above.

If in doubt…

If you find yourself in a profitable forex trade and you are unsure whether or not you should hold or fold it, the first thing you need to make sure you do is NOT let your emotion influence your exit decision as this is one of the most common and detrimental mistakes that forex traders make. If all else fails you can always refer back to this article and the points discussed above, go through them and see if any of them apply to the current trade you are in, you can think of this article as a sort of “check list” for what to do when you are in a winning trade.

The most important and useful thing that you can do when in a profitable trade is to stop and ask yourself, “should I stay in this trade or should I close it?” Have a logical think about it for more than a few minutes and remind yourself that you need to avoid an emotional exit at all costs. Refer back to the points above and ask yourself if any of them apply to you, make yourself a pros and cons list if you need to weigh the advantages of staying in the trade vs. the disadvantages. If after all of this you still cannot control yourself than you might need to seek additional help by reading some of our other forex articles or watch some forex videos. Producing a satisfying outcome for profitable trades is one of the most difficult aspects of successful forex trading, use the information in this article and the logical-thinking part of your brain to decide how to exit your winning forex trades and you will be in a very good position to profit on a consistent basis in the markets. To learn more about price action and simplistic trading check out my forex trading course.

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Nial Fuller

About Nial Fuller

is a Professional Trader, Investor & Author who is considered ‘The Authority’ on Price Action Trading. His blog is read by over 200,000+ followers and he has taught 25,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
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  1. Shirantha

    Very clear , understandable lesson. Thanks sir.

    Reply
  2. Rehan

    Thanks sir

    Reply
  3. James

    I thoroughly enjoyed this article, it was very well explained and had key insights into how to manage the trade. I am very glad I am a part of your LTTTM Membership Nial.

    Reply
  4. Ian WHITTLE

    Great article Nial. Thanks

    Reply
  5. Dmitriy

    Hello, Nial!
    Thank you for this great article! Very helpful for consistent profits)

    Reply
  6. Zinnur

    Important article! Thanks

    Reply
  7. David

    Hi Nial, I love this article, I dont know when you wrote it but it is an evergreen article with unforgetable insight. Thanks man.

    Reply
  8. Благодарность

    Very important article! Now I approximately know when to hold when to clдose. Thanks Mr. Nial!

    Reply
  9. Bongani Muthisi

    Best article ever on trade management. Reading your articles its like building a house brick after brick. My trading house is taking shape. Thank you sir.

    Reply
  10. Thabang Madondo

    Your teachings are simply the best and easy to follow. Thank you my Mentor. Salute

    Reply
    • Mr Rock

      The best way to manage a wining trade In open position is never to be greedy. Contentment is the master key. Of course, once the market is always there today and tomorrow, then it is wise to close that profitable open position and be contented with it because more profit opportunities will always come our way, so far the forex market is still existing. Don’t be greedy but be wise!

      Reply
  11. Lukas

    Very helpfull thanks.

    Reply
  12. Izham

    Outstanding article. Will definitely be one of the many checklists that i shall refer to many times in the future.

    Reply
  13. Tony

    Nial, as with all of your lessons, this was outstanding advice. Thank you for sharing. Your work is certainly appreciated!

    Reply
  14. rajesh vishwakarma

    Nial..a great article which will help to keeps the distraction out of picture once a trade is live and profitable..thankyou

    Reply
  15. Nabs

    Excellent article as usual

    Reply
  16. Marcel Slovakia

    I can just say that all this inputs from You are great.. a lot of to improve in my trading and I will not stop to read even more and more to learn from PRO..
    Thanks a lot.

    Reply
  17. jordi

    Thanks you very much from Barcelona !!

    Reply
  18. Surya

    Another great one.. Thanks

    Reply
  19. Michael Tottman

    Thanks for another amazing article Nial. Great work!

    What time frame is best to use when checking for opposing/reaffirming price action signals. 4hr and Daily or do you ever use 1 hour?

    Happy trading :)

    Reply
  20. eff

    This is really the right way to trade forex and you can call it Art of Charting, you are clearly reading the chart like abc

    Reply
  21. aki olu

    thanks alot.your articles has re-enfored my trading strategies using price action on daily charts.more strenght.

    Reply
  22. Route66

    Getting in is only a part of the game. Out is the hard part. Very useful thoughts.

    Reply
  23. Tshitso

    I have to say sometimes its really hard trying to decide when to cut a trade especially when its against the trend but having received a pin entry.

    Reply
  24. Daniel

    Great Article –

    I’m 5 months in profit on demo and this week has been my first week on my live account and I am up around 8.5 Reward !! Thanks Nial

    Reply
  25. PERI

    VERY VERY GOOD ARTICLE !

    Reply
  26. Gabriel Reis

    hi!! Thanks for this article ilustrated with figures!
    this really makes the diference for that ones like me who are learning about forex market!!

    Reply
  27. Tomson

    Hi Nial,

    I Agree with Fred above here, a very clear and easy to follow material. You have what is needed to understand here, without complicating it.

    Thanks

    Reply
  28. Galen

    Hello Mr. Fuller

    Thanks for the “Meat and Potatoes”. Even though I am a vegetarian the savory smell I still do enjoy. Solid article.

    Reply
  29. roslan

    great article and very honest. thank you.

    Reply
  30. rikus

    Thanks for the posting. Truly Learning Price action strategy n money management are important keys to success in forex trading.

    Reply
  31. Fred

    Nial,
    I am a retired teacher and I know a great teacher when I see the way they teach. I must say I have purchased several Forex trading courses some good,some bad. The way you teach trading is crystal clear.I haven’t read or viewd all your material but what I have is so clear one can’t help but understand it. Don’t want to flatter you, but you are the best teacher I have run across on the net.You must be loaded with patience and a sincere desire to help others and it shows in your teaching material

    Reply
    • nial

      Thanks very much for your kind wors Fred.
      Nial

      Reply
  32. Butch

    This was a great lesson. The analogy to Kenny Rogers’ song was brilliant. My trade management skills got a nice boost from this. Didn’t really consider opposing price action signals as alerts to a possible exit. This was a brief but powerful lesson on good trade management…thank you.

    Reply
  33. Dominik

    I have just discovered you’re website – this is a great article!

    Reply
  34. kttrader

    thanks for the brilliant article,you are the true forex guru

    Reply
  35. Lia

    This is a very good article. I also like to use multiple lots as this allows me to put some money in the bank.

    Reply
  36. Stew

    Brilliant article Nial and exactly what I need at my stage of trading. It especially helps when you have a written explanation and then the pictoral chart to help out. Thanks for taking the time to do this, must take a lot of time to put this stuff together.

    Fully appreciated and keep em coming

    Reply
  37. James OLaosebikan

    This is awesome!!!!!!!!!!!! I really appreciate this course n othter articles I ve read from this site. Price action trading strategy isd best and Money management is the key to profit making in forex trading.
    Lets contd to “make pips , Keep Pips and repeating it”
    Happy trading

    Regards,
    James

    Reply
  38. Nino Beige

    Another great, practical lesson… Thanks Nial!

    Reply
  39. olajubu

    Thanks for the posting of today .,because is a very crucial area to know

    Reply
  40. Mike O.

    Thanks Nial,
    I was thinking about this very subject during my preparations for Monday. An excellent lesson on managing winning trades.

    Reply
  41. Alistair Smith

    Perfect!
    I have always had more trouble dealing with a winning trade than a losing trade.
    This article hit the nail on head.
    Thanks Nial

    Reply
  42. Fx lab

    This is one of the most informative articles I’ve ever read, clear explanations, concise illustrations and good information, thanks fuller you’re the best.

    God Bless You.

    Reply
  43. Richard

    You bewdy!

    Reply
  44. gabriel

    Very logical and easy to understand.
    Indeed an aspect that has a great tendecy to be governed by emocions, and it shouldn’t; it should be decided by confirmed price action/resistance/support.
    How many of us took winning trades before our set gain target ??? :-)
    Thanks Nial,
    I’ve greatly enjoyed your course, and all your articles.
    Cheers mate!
    Gabriel.

    Reply
  45. Salami

    Thanks for the good job you have been doing. infact this is one the best articles have read if not the best.
    cheers

    Reply
  46. Celestine

    This is great.Right at this moment I’m facing a similar challenge with the USDCHF pair,but with this information I’m now well armed.

    Reply
  47. Martin

    This should improve my trading drastically. Exiting is a very poor side of my trading. Thanks Nial. I really appreciate what you do to help us wannabie traders through LTTTM.

    Reply
  48. Cliff

    Excellent, excellent, trade lesson, Nial. You are always providing timely information for this changing market of ours. Well done.
    Cliff

    Reply
  49. Mohamed Ansari

    Very nice lesson for me, I will be follow from next trading day.

    Reply
  50. seb

    nice one nial! great lesson, i must say that i have been practising some of these points you have just mentioned and they really are effective speacially resistance levels, and i do recomend to any new trader to really practise them, becouse it really does inprove your winning rate and like most things practise makes perfect.

    Reply
  51. neale

    I really enjoyed this article, something that can be taken away and put into practice and not just forgotten about.
    thanks niall

    neale

    Reply
  52. Doug

    Very nicely done. I truly love getting these in my email and going back over them from time to time.

    Reply
  53. Zak

    This has always been playing on mind, how much profit to take. Thanks a million of giving my decisions a clarity. I now will be able to do in a much better way what I have been to doing… Thank you from the bottom of my heart…

    Reply
  54. bridgespotter

    Thanks Nial, as usual clear, practical and extremely useful.
    Bridge

    Reply
  55. jon

    nice bit of saturday morning study !
    thanks once again team.

    Reply
  56. Andrew

    It’s great to see more charts with these great articles. Thank you.

    Reply
  57. Kingsley

    oh my Nial, this was what I needed. Than you so much.

    king

    Reply
  58. azmiharun

    Mr. Nial, thank you for your new artical teach me a lot. Now I am practicing candle stick formation as above. I love the long tail the revesal trend. Thank you again.

    Reply
  59. Ivana Dubnova

    Thanks for this lesson. It´s very important for me. All in one :-)

    Reply
  60. Billy Isola

    Goodday Mr. Fuller,

    I must confess, I did enjoy the forex lessons I had read so far. But I’m still trying to get use to most of the points you discussed in your lesson. This is because “I am new in the forex trade”. But I strongly believe that, very shortly, I shall join the pros.

    Please, keep it up

    Reply
  61. John

    This is the part of trading so often neglected as many so called professional trainers have not thought about it to the same depth as their entries. I suspect they think that the entry is the most important and the exit will look after itself. Most give examples after the event rather than guidelines as what to look for and why

    Congratulations Nial

    John

    Reply
  62. Zacharias

    Very useful information!!!

    Reply
  63. Edwin Soto

    I feel this is one of your best articles yet. Congrats! One question, I see you use charts at the closing of NY time. Do you enter your trades at the endo of the day or closer to the opening of London etc. Thanks

    Reply
  64. Bobby

    Now that was a great lesson!
    Exits are as important as entries!

    Reply
  65. Paul Francosky

    Another great article :)

    Reply
  66. jubi

    Simply put JUST GREAT.
    Thank you for explaining so lucidly and with clear illustrations.
    Good Day

    Reply

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