How to Let Your Forex Profits Run?
Have you ever doubted when the transaction you were doing was experiencing profits? You are undecided: do you have to close the transaction and realize the profit, or let the position open for even greater profit potential? I am sure, the majority of forex traders tend to carry out the first choice: close the transaction. I am also sure, many of which later ” face palm ” because apparently he closed the transaction too quickly and commented, “Aah … that’s right , the price went up continuously!”
Did you know, why do most traders tend to close their positions too quickly? There are several possible causes.
First, maybe he doesn’t have a profit target at all. Indeed, there’s nothing wrong with that. It could be that a trader decides when to take profit after the price goes. However, if you have a clear target beforehand, it will be easier for you to close the transaction without having to worry and doubt when the price reaches the target.
The second factor is usually related to the level of courage someone is dealing with risk. The smaller the courage, the more premature he usually closes his position. Now, to “outsmart”, always place your capital in accordance with the risk limits that you set. Concrete example: if your comfortable risk limit is 10% of capital (for example your capital of $ 10,000), then each time the transaction sets a maximum loss limit of $ 1,000.
Then there may also be psychological factors such as lack of confidence.Allowing the market to touch the take profit level, not only requires patience, but also a high level of confidence. Usually, it is the uncertainty of market direction that decreases the degree of confidence of a trader.There are concerns that profits that have been in sight will actually disappear and turn into losses if the market reverses direction. But this can be overcome by using the analysis method or trading system that you have tested for its own efficacy. I never get tired of reminding: the trading system does not need to be 100% accurate, the important thing is proven to be able to produce CONSISTENT profits.
Actually the key is simple. Confidence. Unfortunately, forming confidence for a trader is not as easy as saying it.
As a trader, you must be sure of the quality of the trading system that you are using. Yes, it’s not easy to have a good trading strategy, but it’s another matter. What actually happens is that people are not able to maximize the strategy he has because of FEAR OF LOSS. Yes, no matter how sophisticated the strategy is, it will be useless if you don’t dare to use it properly.
For example, your trading system says, “It’s time SELL! Use Stop Loss 50 pips, Take Profit 100 pips. “If you use the system correctly, then you will open short positions with Stop Loss and Take Profit exactly as suggested by the system. When your position has started to make a profit, you will not close the position before your trading system says that it’s time to close the position.
Another way to leave your position open without worrying about profits will turn into losses, is to use a Trailing Stop . You can activate it in your MetaTrader 4. If you set a Trailing Stop for example 1000 pips, then your Stop Loss will move to break-even level (your Open Position level) if the profit has reached 1000 pips. Trailing Stop will continue to follow price movements, but will not return “backwards” when the price is corrected.