Recently I have been studying different Forex books. One of the things I have noticed come up again and again in different books by different authors and also on this website by the FX-Men is using 2 take profits. The first TP is set at a reasonable amount however the catch is it is half the position. The second TP is set at a more ambitious amount and a trailing stop is also used. Furthermore once the 1st TP has been hit the SL gets moved to BE for the remainder of the position.
Apparently this is a superior way to manage the trades and it yields better results. Also deals with some of the psychological issues that traders encounter. The word is many people have much better results with this rather than using only 1 take profit like we are all used to.
This is an excellent way to reduce your risk and maintain profits.
Remember the number one rule is protect your capital and the number two rule is don’t forget the number one rule.
I often do something similar myself. I often manually trail my SL on EOD trades and if it hits 2% profit will quite often take half the profit off the table banked and trail the SL on the remainder to BE. But only if I have technical reason to believe that Price has more room to run, and not in a choppy market.
Hmmm that sounds pretty good. I am going to implement it with one of my systems. Seems to be a good way to protect profits and also attempt to let the winners run. Nothing more frustrating than watching the price go in your favor and then watching all the profits evaporate!