Closed Position is a term you will often hear when learning about forex trading, especially under order execution. 

But what does it mean? How does it affect your trades, and why should you care about it as a beginner? 

Let’s explain it step by step, so you can understand it completely by the end of this article.

What Is a Closed Position in Forex Trading?

A closed position happens when a trader ends an open trade. This means the trader has exited the market, and the profit or loss from the trade is finalized.

For example, if you bought a currency pair like EUR/USD, you opened a position. When you sell that currency pair later to take your profit or cut your losses, you close the position. 

At this point, your trade is complete, and no further changes can happen to it.

Every trade you make in forex starts with an open position and ends with a closed position. 

You cannot make or lose money in forex until you close a position. 

The outcome of your trade, whether you make a profit or lose money, only becomes real when you close the position.

For beginners, this is important to understand because leaving positions open without knowing when to close them can lead to unnecessary losses.

How to Close a Position in Forex

These are the steps to close a position in forex trading:

1. Log into Your Trading Platform

Open your trading platform and go to the section showing your current trades.

2. Find Your Open Position

Look for the trade you want to close. It will show the currency pair, your entry price, and the current market price.

3. Click ‘Close’ or ‘Exit’

Most trading platforms have a simple button to close a trade. Clicking it will close your position at the current market price.

4. Confirm the Closure

Some platforms ask you to confirm. Once you confirm, the trade ends and your profit or loss gets added to your account balance.

When Should You Close a Position?

Closing a position depends on your trading plan and goals. Below are three common scenarios:

1. Taking Profit

Close your position when the market reaches your profit target. This ensures you lock in your earnings.

2. Stopping Losses

If the market moves against you, closing your position can minimize losses. Many traders use a stop-loss order to automate this.

3. Market Changes

Sometimes, market conditions change suddenly. If the trade no longer aligns with your strategy, it’s better to close the position.

The Relationship Between Open and Closed Positions

Understanding open and closed positions is essential in forex trading. 

An open position means you are active in the market, and your trade is still running. 

A closed position, however, finalizes that trade and determines your profit or loss.

This balance helps traders manage their accounts, track their performance, and make informed decisions about their next trades.

Conclusion

A closed position is the final step in every forex trade. It’s where you either win or lose. Learning when and how to close a position is one of the most important skills in forex trading. 

Without this knowledge, you cannot control your profits or manage your risks.

Take your time to study this concept because it can make a big difference in your trading success.