[QUOTE=“useless23;617082”]Example: let’s suppose I have a trade with a RR of 1:3. My stop loss is 50 pips and thus my profit target is 150 pips. What happens when the trade gets to 100 pips in my favour and I am holding out for another 50 pips? The risk reward then becomes 3:1 and thus, I would be risking 150 pips to make 50. Would you trade like that ordinarily? If not, why are you leaving money on table to potentially give it back to the market? What happens if price reverses when I am 100 pips in profit? I either end up losing 100 pips if I didn’t move by SL to breakeven or 150. [/QUOTE]
Setting static limits and stops can definitely be a trap newer traders fall into.
I don’t necessarily think it’s as black and white as you propose though.
For me personally, I’ll set an initial target and keep that in mind. But, I’m always jumping through timeframes monitoring the trade in real time. If it shows signs of stalling, I’ll close out the position and book full profit right then and there.
Or, you can close out a portion of your position, and move your stop to break even + spread.
Or, you can close out a portion of your position, and trail your stop.
Or, you can static trail your stop once the position moved x pips in your favor
Or, you can dynamically trail your stop manually, reading price action live on lower time frames.
Tons of options on how to manage a trade ya know.
Trading isn’t just finding a setup, setting a pending order, stop and limit then waiting for one or the other to be hit.
I’ve always felt that actively managing a position is the best way to learn, develop a strategy, and protect your capital.
It’s all about risk management. The quicker you can eliminate risk, the better off you are.
That doesn’t mean you should move moving your stop prematurely just because a position moves in your favor.
You need to develop a strategy which allows proper “breathing room” but also considers risk.