HAVE AN “EXIT” STRATEGY AND STICK TO IT
One of our favorite sayings in trading is that “all a long-term trade is……is a short term trade gone bad.” As funny as this sounds, I think many of you will realize just how dangerously true this fact is. How many times have we heard people say “it has moved against me quite a bit but this is a longer-term position so not worried about it.” While in some cases it may be true that the position is indeed a long-term position, we are skeptical of those shorter-term traders who talk of longer-term positions. The reality is that the real reasoning behind this justification is simply that the trader either did not have a stop-loss in place when entering the trade, or decided to remove his/her stop and hold on for the longer-term. While in some cases this strategy may in fact work out, all it takes is one trade that runs into a margin call for all of your hard work to be wiped out. As such, we recommend that traders know where their exit is ahead of time and stick to their stop-loss religiously. If you determined that you would not want to be in the trade beyond a certain point when you entered the position, then nothing should change once you are in except for a newly adopted sense of false hope which should be suppressed and ignored at all costs.
P&L Update and Overview: Many of you have been asking for a way to better track trading results and open positions. In response to these requests and in an effort to be fully transparent, a simulated portfolio was been created in June to track and mirror all recommendations and trades. Below is a return on equity curve since inception on June 1, 2009, along with an open and closed position tracker. I am hopeful that this will make things easier for you all.
Additionally, please feel free to check out a [B]full profit and loss statement since inception on June 1, 2009[/B].
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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