I have found that trade management is one of the most important tools a trader can use to improve their trading profitability.
There are many trade management techniques that may be implemented. For the scope of this training I am going to focus on adding to a position. The technique helps to leverage my trades for increased profits.
Steps for adding to a trade
- Have clear entry point, Stop Loss, and targets as defined by your trading plan.
- Must not exceed your predetermined risk parameters.
- Have predetermined set rules for adding to your trade.
How I do it
- I first split my trade risk in half and open the first half of my position.
- If the requirements for my trade are still in place I then add the second half of my trade at the correct time.
- Note the adding will be done if the trade is positive or negative.
After Entry price moves against you 50 pips begin looking for an opportunity to add.
Wait for the entry requirements to confirm a re-entry as long as it does not pass your initial stop loss. (see example)
- Keep the stop loss at the same technical level as the initial half.
- Since Stop Loss is shorter adjust trade size to equal the same amount of risk as the first half.
Thanks for stopping by if you have any questions or comments please do not hesitate to contact me.
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