Your Guide to Letting Your Profits Run

Your, Guide, to Letting, Profits, Run, skills, high-probability, Forex Training, fx trader, forex

What do you consider to be one of most lucrative of all trading skills? Perhaps knowing the right strategies and how to pinpoint high-probability trade set-ups with high reward potential?  Or perhaps it is down to effective risk management? Yes, these are all very important, but being profitable long-term is actually far easier than this: Believe it or not it’s, largely down to knowing how to keep losses to a minimum and letting those profits . . . run!

You see, if you’re like many people who try their hand at trading, most of your trade outcomes are likely to do one of two things: 1) win small; or 2) lose small.

From time to time, when all of the stars in the universe align and you get a fantastic trade set-up with the trend, you have the potential for a runaway winner that can make your day. It could even be the trade of the year if you let those profits run without cutting the trade too early.

Ironically, holding that trade, even though it is cumulatively making great gains (and has the potential to make a lot more) can often prove very tricky for many traders. But why is this? In this article, we will examine why in addition to giving you a tried and tested system for letting those winners, win . . . big!

The Perennial Problem

Ask any experienced trader about any of the biggest dilemma’s they have faced on their journey to becoming consistently profitable and it is likely they will tell you that their inability to emotionally “let go” of losing money is not among them. Yet, risk management routinely tops the list along with mastering the art of letting those winners run. However, this is a skill often serves to be very counter-intuitive in its nature and does not come naturally.

Fearing a loss: It’s seldom that anything frustrates the professional trader more than exiting a winning trade too soon . . .

yet this is something that happens all too frequently. After all, our natural inclination is to take whatever profits we can and get out of the trade before it could turn the other way. This fear of losing is hard to bulldoze and adds weight to the argument that profitable trading can be very counter-intuitive . . . but knowing this will let you win half the battle.

“Recency bias”: Whether it’s trying to “make up” the losses endured from a recent losing position or trying to maintain a euphoric winning streak, traders can be far less likely to let a winning trade perpetuate its gains by letting those profits run. Conversely, they will negate their strategy’s rules for exit and cut the position early, simply to bank what money they can while leaving a lot of the money on the table.

External influences: The potential of news, financial media or other traders to talk you out of your winning trade early, even though it’s making good money – and has the potential to make a lot more. This is all too frequent. To overcome this negative influence, many traders who trade set-and-forget strategies with high profit potential take great pride in ignoring such influences altogether. So too, should you!