Cutting losses and letting profits run
In my early trading years this was one of the main reasons I used to
lose at trading overall, as soon as I saw any profits in my trade I could
not resist to take them. Although this may not seem like a bad thing to
do, if you are risking 50 pips and taking profit at 30 pips you have to
maintain a huge win % to stay ahead in the long run.
For example if you risk 50 pips to get 25 pips you need to have a
66% winning trades just to break even not to make any money!
Now if we risk 50 pips to get 150 we now only need to have winning
trades 25% of the time to break even. Don’t you think that would be
easier?
Can you see how important this can be to your success?
In my early trading years this was one of the main reasons I used to
lose at trading overall, as soon as I saw any profits in my trade I could
not resist to take them. Although this may not seem like a bad thing to
do, if you are risking 50 pips and taking profit at 30 pips you have to
maintain a huge win % to stay ahead in the long run.
For example if you risk 50 pips to get 25 pips you need to have a
66% winning trades just to break even not to make any money!
Now if we risk 50 pips to get 150 we now only need to have winning
trades 25% of the time to break even. Don’t you think that would be
easier?
Can you see how important this can be to your success?
