I have often read traders saying they closed half their position at X number of pips and move stop loss to BE.. While moving stop loss to BE makes sense, but closing half of the position doesn’t.. I have looked around but didn’t find anything useful that explain how this works..
If I open 1 lot and aim for 100 pips.. and I decide to close half my position at say 20 pips. And the other half at when 100 pip is reached.. Am I not limiting the total gain to just $60 (1$/pip)? Whereas the original gain would have been a full $100 had I not closed half my trade at 20pips..
Clearly decreasing my risk to reward ratio..
I hope I am making sense here.. Its just that I am struggling with keeping pips. Very often my trade goes my way 30-50 pips before reversing and either closing with a few pips, at breakeven or worse at a small loss..
I am trying to figure out a way to preserve the small gains I make and that’s why exploring ‘closing half position’ concept.. so far I have not been able to understand the logic behind it..
I’ll appreciate help from all the experienced traders at babypips..