I discussed the matter with Bill Poulos today and asked him the same question. Are you aware of his statement?
“Even the most experienced Forex traders often wait way too long to protect their positions and often sit back and watch their profits disappear into the wind.” And that wasn’t all — he then went on to demonstrate a very simple concept, much like Gambler’s Ruin, that permeates the Forex trading world from top to bottom.
Traders work tirelessly to recoup gains when they begin to experience profits in a trade beginning to slide. They lose sight of the fact that they must safeguard the trade’s remaining gains. And what is the consequence? A reverse trend hangs on, and the once winning trade turns into a loser, the trader grows increasingly frustrated.
I have personally witnessed this, and it’s the simplest trap to find yourself in, since you can talk yourself into thinking that the Euro just reached that intra-day peak and it can shoot back up there! The only problem is, the high isn’t reached and your 20 or 30 pip profit evaporates and turns into a loss.
This is a drastic case, yet has it ever occurred in your own situation?
What action should you take?
There was an answer for that also!
He said that the majority of those who trade have no knowledge of what the available profit potential is for any single trade — that is, they don’t go into it with a set profit target, which would let them take whatever profit the market yields and then exit the trade in several steps. And, minus a strategy that protects their initial investment first and manages profits second, there is just no means for the average Forex trader to do okay in the foreign currency markets.
To position yourself correctly, as a trader you MUST have a tiered strategy — one that identifies for you the BEST available trades, clearly delineates a profit target, helps you manage yielding those profits, and right from the start, teaches you how to conserve your capital!
He refers to this highly unique philosophy as managing risk first and then, second, taking profits.
View the beginning of his current, free video series about it at this link:
http://www.theforexnittygritty.com/private-forex-training