Knowing when to exit a trade

One crucial thing that spread betters need to know is when to exit a trade. John C Burford illustrates a simple exit strategy, using recent action in the euro/US dollar market.

Early on in your trading/spread-betting career you will encounter the advice: "Always trade with the main trend". Sounds simple, doesn't it? If a market has been going up, you buy (go long). If the market has been going down, you sell (go short).

But if you've been around the markets for a while, then I'm sure you'll have discovered that, as with most 'rules', it's easier said than done. The fact is that you cannot simply jump into a position whenever you get the urge. The likely outcome is often very unpleasant.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.