this is kinda hard to explain, though many of the replies are good, lets just put it this way, there always should be a plan, and you have to stick to it religiously, usually what i do on my hotforex account i set small goals, as long as i end up getting a profit from any certain trade its good, i always eject any thought of “it could have been bigger” dont matter how big the profit is aslong as its a profit… in my opinion even BREAK EVEN is a good ending compared to a lose. so stay on the safe side and it should work fine…
When one takes their profits depends on the strategy they are using. My advice is, follow your strategy and trading plan and don’t deviate from it.
Yes, it takes time to understand your trading style! If you are comfortable with small TP and SL; that means you are perfect for scalping trading! Besides, if you are comfort with long SL and TP then you can try with swing trading style!
A lot of what I’m going to say has already been said, but you know what? I’m gonna say it again, because the truth deserves to be repeated.
First and always - Plan the trade, then trade the plan.
Your trading plan should be able to identify trading opportunities that offer you a Reward:Risk of AT LEAST 2:1. Meaning that if you can afford a risk of 20 pips, then your trading plan should be able to identify trades that offer a potential reward of at least 40 pips, and you should be passing on any trading opportunity that doesn’t offer you at least a 40 pip return.
If you can do that much, then you’re head and shoulders above half the retail FOREX schmucks out there.
Now lets get sneaky. Let’s try having a T1 and a T2.
So say you have a set up, and your plan is to buy 2 micros at X.xx30, with a profit target of X.xx70 and a stop loss of X.xx10. You buy, set your stop loss for two units at X.xx10, and a sell order for ONE unit at X.xx70. Set the sell order for the other unit at a higher, but still reasonably achievable, price. In our example we’ll set it at X.xx90
If the price drops to X.xx25, you get stopped out and the trade is done. Such is life, tomorrow is another day. If the market swings in your direction and your sell order gets triggered, cancel your original stop loss, and set a new stop loss at X.xx50.
Now you’ve got one unit sold at a tidy profit, all locked up. If your other unit gets stopped out then it STILL sells for a (small) profit, and you have a chance that you’ll sell that second unit at a HUGE profit.
This works IF you have the time and discipline to monitor your trade. Most of us have jobs and don’t have that kind of time. And many traders don’t have the emotional self possession to monitor a trade that closely without succumbing to the temptation to depart from the trading plan and “tinker” with it.
Did I say “many traders don’t?” I think I meant “MOST traders don’t.”
So that brings us back to “Plan the trade, then trade the plan.”
This, this, this. So many times, THIS.
Money management, self discipline, and emotional self possession are the bedrock foundation of successful trading. If you have that much, then you can make any trading plan work.
No offence, Duane, but that is 180 out from how I understand successful trading to be.
Fund your account from your risk capital, money that, if it is lost, will not affect your lifestyle.
Risk no more than 2% of your account on any one trade.
Have a trading plan that offers a reward:risk ratio of at least 2:1.
Understand that your trading plan may not offer you profitable trades every day. Market conditions may not be right, reward:risk may not be right. One of the worst things you can do is try to force fit the market to your trading plan.
And seriously, 100% return a month? I know nothing about you, Duane, but that’s the kind of thing a slimeball subscription service salesman might say.
“The challenge is then to determine which trading strategy can get you this consistently.”
No. There is no Holy Grail. The challenge is to determine what trading strategy fits the trader’s personality, trading style, and life style.
Don’t scalp if you don’t have six hours straight a day to state at your computer monitor. Don’t trade long term set-ups if your personality requires instant gratification.
I’m gonna say it again, 'cause it’s important - There is no Holy Grail except for sound money management, self discipline, and emotional self possession.
“Anyone who says anything else is selling something.”
Depends on the time frame you’re trading. That’s probably WAY to high for scalping, but for longer term swings that’s probably fine.
Hey man,
I love the internet, one of the greatest inventions in the last few decades. But one of the problems is that it creates a lot misunderstandings on fora like these that lead people to incorrect conclusions and name calling that doesnt happen in real life.
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The approach I was describing represented a GENERAL example of the approach to take. Like all theories, when you are describing something, the numbers are not necessarily set in stone but can be adjusted based on your personal goals.
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All the numbers were HYPOTHETICAL…so the 100% Return was not what I offer nor what I think someone should aim for. It could be 100%, 20%, 4% or 1000% per month.
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I was making the point that if the person wants to make $1000 per month from trading and has $1000 to start trading, then the return he is looking for is 100% (assuming he withdraws all his profits each month). If he wants to earn $500 it would be 50%, if it is $100, then it is 10% per month. etc…
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Yes. It is true what you say…that persons must find a strategy that is in sync with their personality etc.
"There is no Holy Grail except for sound money management, self discipline, and emotional self possession.“Anyone who says anything else is selling something.”
But notice how you dont say that it must also provide a good Rate of Return and Monetary Reward!! This seems to be missing in most beginners search for a good strategy.
- This Top-Down approach is a way to find that monetary target that is large enough so traders dont waste time with strategies that arent worth their time/effort/money.Trading must be worthwhile from a financial standpoint IN ADDITION to good risk reward ratios etc.
Or else what is the point?
- Holy Grail- if a trader likes Strategy A, that strategy can be his Holy Grail because it provides him with everything. But for me it might be Strategy B. Its all based on individual tastes - again not to be taken literally.
All the great Boxers, Football Players etc. think they are the best or else what is the point of life? Ambition and Confidence are important.
Duane
Finding the right level to exit with profit is maybe the hardest question a trader has to face.
I trade purely off the chart so for me this just isn’t a question. I enter long where the TA says there is a high probability of price going higher. I place the stop-loss at the highest price at which the TA says there is a high probability of price going lower. However you define these two things is up to your and your personal approach on TA but surely these truths must be accepted by every trader.
So, the place to take profit on a long is the lowest price at which the TA says there is now a higher probability of price going lower rather than higher. Use your TA, trust your judgement, don’t be scared.
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I agree with Tommor’s advice. It’s important to trust one’s own judgement as a trader. I cannot tell you the amount of times when I’d made the right call, read someone else’s opinion and changed my mind, only to lose money because I didn’t follow my own judgement.
I try to follow this principle!!