I had a chance to chat with Bill Poulos today and posed that question to him. Do you know what he said?
'most experienced forex traders wait too long to move stops to guard their positions and often watch their profits disappear.'
And that wasn't all - he went on to clarify a simple concept, like Gambler's Ruin that permeates the forex trading world.
basically, once a trader sees profit in a trade begin evaporating they get solely focused on getting back the lost profits. They forget to see the need to protect the profits that they still have in the trade. The result? A reversal continues, the once-profitable trade becomes a loss-making trade and the trader's frustration mounts.
I've seen this myself and it's the easiest trap to fall into, as you convince yourself that the Euro dollar just hit that intra-day high and it can get back up there! Except - it doesn't and it continues to drag back till your 20 or 30 pip gain turns into a twenty or 30 pip loss.
that's a pretty dreadful example - but have you had that happen to you?
What do you do?
Bill had an answer for that, too!
He said most traders don't know what the available profit potential is for any single trading event - that is, they don't set profit targets which let them take what the market gives them and then exit the trade in multiple steps. And, without a method that protects capital first and manages profits 2nd, there isn't any way the average forex trader can survive in the foreign currency markets.
to position yourself properly, traders MUST have a multi-part strategy - one that teaches them how to identify the BEST available trades, clearly sets out a profit target, helps manage the taking of those profits and from the outset, teaches traders how to protect their valuable capital!
He calls this handling risk first, taking profits 2nd - and it's truly revolutionary thinking.
Watch the first part of his new, free video series on this right here :
http://www.yourforexangle.com/y/?i=1042601&u=4&l=f2
Mitch Horn has been writing articles online for a few years now. Not only does this author specialize in diet, fitness and weight loss, you can also check out his latest website on
FX Online Trading which reviews and gives the best tips
Forex Day Trading System.
.
