Steps To Avoid Giving Back Your Profits Right After Experiencing a ‘Big Win’
In trading, there is a 50/50 chance of deciding it right. This means that the odds are quite favorable on you as long as you knew how to manipulate the market. What makes everything too difficult is the holding of these profits. Since when did you have a big win in trading? What have you done with it? Did you just give back all your profits on your next trade?
Sad to say, there are a lot of traders who lose their wins after giving it all to the next trade. This cycle must be ended. If you are determined to consistently profit in FX trading, you need to know how to protect your own profits.
Understanding the ‘Big Win’
‘Big Win’ changes its meaning from one trader to another. The interpretation of this word from one trader can be different from another. Take note that every trade you make should have 3R potential which means that one pip can be placed at risk in exchange for the three pips gains. What should you do to protect your profit after a big win? Here are the steps to follow.
Step 1: Update Your Records Immediately
Step 2: Take Some Time Away From Trading
Step 3: Start Again With Only The Half Size Position.
Update Your Records Immediately
The very first thing that you need to do after a big win is to update your records in trading. You can use an online journal, a paper journal, or a spreadsheet. What’s important is that you update it with your latest wins as soon as you get a hold of it. This move might sound a bit trivial on the first try but what matters most is that you get to add your profit to your journal.
When you document everything, you are also solidifying your wins and giving meaning to those intangible events that have occurred in the past. Your wins are not merely something that’s happened but a trade that you have put in due to certain criteria.
Take Some Time Away From Trading
One of the most overlooked things in Forex trading could be this thing – taking a break.
There are quite a number of traders, if not all, who are too eager to invest their newly acquired capital. Instead of taking some break, they hastily jump for another trade. The justification for this action is that they are utilizing their “house money”.
The effect of house money is that a trader tends to use their money into a riskier investment. With the said effect, you become more prone to acquiring more risk in trading. Why? Because it feels like the money you earned just a few minutes ago is a ‘disposable capital’.
Start Again With Only The Half Size Position
After taking a break, you will feel refreshed and think that now is the best time to start FX trading again. But instead of starting back at full size, you might consider investing half the size of the position. This will help remove any lingering feeling from your previous win.