A common problem traders often face is knowing how you should be managing your live trades.
This article explains just how you should think about protecting your open trades when live in the market.
Often SO MUCH time goes in to finding a trade to place, checking it meets the rules and so on, that planning how to manage the trade when to manage stop losses and take profit are often overlooked.
Over the years, with experience, you will find that taking time over exit strategies and how to manage your trades are just as, if not more, important as working out why to place the trades in the first place.
To sustain longevity trading trade management is key, knowing correctly when you should be managing your live trades will bring long term success.
There are a few key rules you need to be aware of when talking about this subject;
- Do not trade without a stop loss. You should never place trade without a stop loss – this is golden rule #1 and also the most simplest to keep to.
- Do not widen your stop loss if the trade is going against you – a rookie mistake is for traders to keep widening their stop loss and increasing their risk in the hope the trade will turn. Accept the loss, when it happens, and move on.
- Always stick to your trade calculation. Before placing your trade you should know how much capital you will be risking and how much you will be looking to gain. Once worked out this should be set in stone. Always stick to this calculation and similarly as the point above, do not adjust this mid-trade.
- Manage your trade once it starts to reach your TP. Some traders have different rules but as trades go into profit we should be keeping an eye on when we should be bringing our stop loss closer. Our trading team like to start to control our trades when 20 PIPs in profit, at this point as a minimum we bring our trades up to break even. We have seen too many trades turn against us too often to not keep an eye on this aspect.
Management of your trades is one of the great conundrums of trading – where to take profits – and it pays to have a system. Without a method, you will be left floundering around – and probably be very frustrated at missing some great moves, or seeing a good profit vanish by poor stop placement.