Importance of risk management : this trade is now risk free!
Atualizado
I took this trade and was expecting price to move 3R in my favor. However, after hitting 1R, the price just collapsed back.
Even though I might loose this trade - but because of my risk management plan, this trade is already risk free for me (after it hit 1R).
I cannot express enough - HAVE A RISK MANAGEMENT PLAN that works for your attitude!
Risk management
1) Reduce 50% at 1R => Trade becomes risk free
2) Reduce further 25% at 2R AND move SL to break-even
3) Close trade at 3R
4) Winner = 1.75R (looser = 1R)
Even though I might loose this trade - but because of my risk management plan, this trade is already risk free for me (after it hit 1R).
I cannot express enough - HAVE A RISK MANAGEMENT PLAN that works for your attitude!
Risk management
1) Reduce 50% at 1R => Trade becomes risk free
2) Reduce further 25% at 2R AND move SL to break-even
3) Close trade at 3R
4) Winner = 1.75R (looser = 1R)
Nota
Nov 2020 updateNOTES : I've looked at many of my successful trades - price once leaves the trading zone, never comes back (at least in a successful trade). Hence, there is no reason to not protect profits sooner. This will for sure get us out of successful trades if price comes back, but that ratio is very less (like 1 in 10).
Hence, Move SL to Breakeven the moment price hits 1R. That way, in worst case scenario price comes back and enters the trade zone, you can still exit with 0.5R profit.
**Updated Risk management**
1) Reduce 50% at 1R => Trade becomes risk free AND move SL to break-even
2) Reduce further 25% at 2R
3) Close trade at 3R
4) Winner = 1.75R, Looser = -1R, Breakeven = 0.5R
Aviso legal
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