Most forex traders make detailed strategies for trading in the market. Usually, these strategies cover things like figuring out entry and exit points, maintaining positions, and even control of emotional reactions. One thing that forex traders rarely consider while creating their forex strategy is the aspect of withdrawing their profits.
However, when to take out the money that you have earned is also an important decision that needs to be weighed up carefully. Ideally, you should have a separate strategy for withdrawing your money from your account.
Such a strategy would basically be designed to figure out the most efficient and beneficial take out point in your forex trading routine. There would be many benefits if you were to create such a strategy. Here are some of these benefits.
Improve Your Analysis of the Market
By carefully analysing the right time to withdraw your profits, you would also be analysing the forex market in a unique manner. For instance, you may analyse the market in terms of when it is least profitable to trade in and, hence, most beneficial for you to withdraw your profits.
Alternatively, you may even consider the most volatile moments of the market as perfect for your withdrawal because this would protect your hard earned money. Regardless of which way you swing, you would have to look at the market from a broader lens which would, sooner or later, help you with your forex trading efforts.
Puts Losses into Perspective
The amount of money you withdraw from your account would depend largely upon your success rate in the forex market. Therefore, if you have had a particularly bad stretch then you would be withdrawing less money. This, however, would have its benefits as well. You would get a new perspective of the frequency of your losses and their extent as well.
It is common for forex traders to get stuck in a rut with losses as they get lost in either trying to avoid more losses or recouping all their losses. The take out point that you will set with your withdrawal strategy would act as a break in your momentum which can be very beneficial if you are dealing with loss apathy.
While having a withdrawal strategy will give you a perspective on your losses, it would also do the same for your wins. As you make withdrawals regularly from your account, you would remain free of the perils of overconfidence like trying to invent opportunities, increasing lot sizes, playing with stop loss levels, and overtrading. This can be very beneficial for traders who tend to get overexcited in the market after a few winning trades.
Increases Your Motivation Levels
There is no better motivation in the world than to enjoy the fruits of your own labour in the way you planned to do in the first place. In other words, if you had dreams for your profits before you entered the forex market, by realising those dreams you would be motivating yourself to earn even more money.