Taking partial profits: The worst strategy ever
There are plenty of strategies out there in the internet, some of them are good, and some others have negative results on our results.
There are even some strategies that are good for some traders, and bad for others.
That’s how trading is.
Today I want to talk about one strategy in particular: Partial profits.
Have you used it? At one point I did use it, until I realize it was hurting my trading results.
So here it goes.
Partial Profits: How does it work
Here is how it works:
You decide to go long and you take your trade.
Once your trade reaches a determined amount of pips on your favor or a predetermined resistance level, you decide to take profits on half of your trade (or one third or what ever).
Most traders do this in case the market retraces back, and erases all profits made.
That’s how taking partial profits work.
It would work if the market actually moves back to your entry or SL level.
But what if the market continues its way up? Please think about this for a moment…
Now, for those of you who take partial profits because you don’t want to lose that trade… let me tell you something:
We are all traders, that’s what we do… We should feel comfortable with losses, having a trade go south is part of trading, all traders experience that, even the best traders in the world.
So losing trade is part of the game, you just need to make sure that when you win, you win a whole lot more than what you lose.
It doesn’t make sense to me
I’ve always questioned myself. I try to do it in everything I do.
Why should I do this, this way and not the other way?
That’s what allowed me to come up with a strategy that actually works.
So let me ask you one question:
What do you think is the best way to know if your trade is working or not?
You might come up with different answers to that question, but there is one answer that all of you will agree with.
You know your trade is working because the market is moving on your favor.
And now, let me as you another question:
Why on earth would you limit the profit potential of that trade by taking partial profits if you know your trade is working?
Because that’s exactly what you are doing…
When you take partial profits what you are actually doing is limiting the profit potential of your trade.
Wouldnt it make sense to do just the opposite?
Instead of limiting the profit potential (by taking partial profits), if you know the market is moving on your favor, wouldn’t it make sense to increase the trading size of your trade so you make more money?
Think about this trader, and please comment.
That’s exactly what I do, I try to increase the trading size of each trade when the market moves on my favor.
Because I know there is no better way to know that you took the right decision, than by letting the market tell you so.
If you do this, a good trade could transform in a great trade. you could easily double your return of that trade.
Whats your take on taking partial profits?
What do you think about my point of view?
Share your thoughts.