Watch The Risk!



Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.

 

The setting of profit targets is one of the most neglected elements of trading. Some will establish a target initially and then promptly forget about it when the market conditions change. For instance, during a slow period they will adhere to their targets, but then when the market seems to be offering a multitude of trading opportunities, emotions, particularly greed, tend to take over. This is one crucial aspect of trading psychology that needs to be acknowledged and developed as a habit from the outset. I regard it as a basic trading survival skill. Let me clarify….I am by no means suggesting that we as traders should close our trading platforms as soon as our specific targets are reached, although some traders prefer to do this. However, from personal experience, as well as observation, I know that we sometimes run the risk of up giving back our gains as we chase the market for more.  

 

One way of resolving the issue is to decrease trading sizes after having made our targets, thereby reducing exposure and risk. Another alternative for swing traders is to move stop losses to breakeven or better, so that you are basically running a free trade, and so there is no longer any risk applied. We are in a period of high volatility, with  added risk of the markets being thin. We are competing against institutional traders and so we need all the advantages we can get. This is just a kind word of reminder to my colleagues, as well as myself…Watch the risk!

 

Thanks for reading, and a successful trading week to all! 🙂

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  • True story. My bottom line has turned from negative to positive just by sticking to my limit targets. Gut wrenching though it is to watch price move further into profit area after you’ve closed out, its significantly less gut wrenching than emptying your account. 🙂

  • Patricia

    Thanks, sophia. I made some of these mistakes just recently, I regret to say. Made a lot of money and gave it back through carelessness.

  • thanks for the comment

  • Demonwillori

    great advice!!