In today forex faq, we have a question from one of our fellow traders.
Below is the question:
What is the most optimize method to manage our trade from the time we open a trade until it closed in particular those trades on H4 and daily timeframe. I know there is no right answer but just want to get some thoughts.
In fact, both trade management and risk management is equally important in trading. The above is a good question that should have been asked long ago and I am glad that someone bring this up for us to discuss it here in this post.
Like what the question says above, there is no right answer for it but I am going to share with you what I usually do for my trade after it is opened so that you can also try it out.
Whenever I enter a trade, I will first place a stop loss and a target profit. After that, I will usually walk away from the screen. Once in a while, I will go to see how the trade moves and if it is in my favour, I will start to shift the stop loss.
Once the price has hit a certain profit level, I will start to shift my stop loss to breakeven. This is to ensure that I will not lose a single cent even if the price later reverses against me.
If it passes a major support or resistance, I will start to shift my stop loss to lock in certain profit. The stop loss will be below the old major resistance if I am going LONG. If the price continues to break through more resistance, I will also shift my stop loss to lock in more profit until it finally hit my target profit.
By shifting your stop loss to lock in profit, this is to make sure that you are making money from the trade even if it suddenly reverses against you.
Some traders find it very troublesome to constantly monitor their trade and therefore do not like to shift their stop loss. They prefer to wait for the price to hit the target or their stop loss. However this is all due to personal preference and there is no right and wrong for it.
The above is how I manage my trade and hope that it is useful for you. If you have anything to share, do feel free to give your comment below.