Hello traders! In this post, I'll share my trade management advice.
But first, let me describe exactly what trade management is.
The process of controlling a position that is already open is known as trade management.
Any trading strategy must never overlook trade management, which is a crucial component.
1. Never remove a stop loss While suffering a significant loss, many traders refuse to acknowledge their error. Instead, they remove stop losses in the hope of a reversal as the price moves closer and closer to a stop loss.
When the price is rapidly moving in the desired direction, an alternative scenario might arise. Fearful of missing larger profits, traders remove a stop loss as they observe the rising profits.
Both scenarios may result in significant losses that are greater than anticipated. The market is influenced by a number of factors, making it easy for it to lose all gains and move in the opposite direction much longer than traders remain solvent.
A stop loss should never be removed for these reasons.It must permanently be fixed.
2. If a position is losing money, you should never change your stop loss. It hurts to watch the price get closer and closer to a stop loss. Some traders move their stop loss, giving the market more room for reversal, rather than removing it.
Even though using this method is safer than completely removing a stop loss, it is still a bad habit.
The potential loss increases with each stop loss adjustment, but there are no guarantees that the market will reverse.
It is highly recommended that you maintain a fixed stop loss, wait for the price to reach it, and then accept your loss.
3. Know in advance where your profit is taken in order to protect it.
Do you use a trailing stop or have a fixed tp level?
The answers should always be known to you.
Many traders manually close the trade or move take profit closer to current price levels as the price coils around the take profit level but fails to reach it.
Another common occurrence is when traders remove TP in the hope of making a larger profit than they anticipated when the market reaches the desired TP level so quickly.
Long-term trading performance is negatively impacted by such emotional interventions. Removal of TP may even wipe out all profits.
Always adhere to your rules and don't let your greed get the better of you.
4. Never add to a losing position While watching the price refuse to move in the intended direction and cutting a partial loss, many traders add to a losing trade in the hope that the market will turn around and recover all of their losses.
Again, this kind of error typically results in significant losses.
Remember that you cannot add to a position before the market moves in the desired direction.
5. Close the trades manually only in accordance with the rules. New traders frequently manually close their trades due to a variety of random factors:
they changed their mind or saw someone else's point of view.
Remember that you should always have strict rules for a position manual close if you opened a trade according to your trading plan.
Avoid allowing random factors to influence your trading.
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