Taking partial profits: The worst strategy ever

Misconceptions in Forex

Hey traders,

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.

That simple.

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.

My strategy

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.

Your turn

Whats your take on taking partial profits?

What do you think about my point of view?

Share your thoughts.

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • hira

    ji raul what do you think about the eur moving back into the master trend direction ??? current trend is bullish … and seems to be building with more buyers now , is time to take there money ??? although I was currently trading bullish this is a area I would be concerned about … 1 hour tf possible 10 R 4 hour tf possible 6 – 7 R and daily possible 3 – 4 R if trading back into the key support area …

    • Raul Lopez

      Hello Hira,

      I still have the EURUSD trading in a bullish condition.

      Good luck!

  • Chad Hogan

    Hi Mate,
    Yes I’m able to log in now. Tania and I are having a bit of trouble with the audio though. e can hear you fine but not the other people your talking to? Anyways we get the general drift. Much appreciated. Tania says a big hello!

    • Raul Lopez

      Ahhh ok, that’s because they type through the chat section…

  • Chad Hogan

    Hi Raul,
    Ive learnt from past experiences not to take partial profits. Usually when I do it its because I begin to analyse price action on smaller time frames and I begin to panic.. That’s 1 sure way to negative results. We must trust our day charts for market direction. Dont you agree?
    Thanks

    Chad.

    • Raul Lopez

      Hey Mate, have you been able to login to the traders section and watch the course videos?

      I definitely agree with you Chad… its easier said than done but that’s what we need to do…

      Hope everything is going well… how is Tania? Please tell her I say hello…

  • hira

    nice article … so true …

    • Raul Lopez

      Glad you liked it Hira!

      Good luck!

  • cassyd

    Hi Raul
    I think our downfall is actually trading more than we can physically afford to loose. wherein closing the opposite side of the trade cripples the account. another problem is trading basically on smaller timeframes without reflecting on the bigger picture (higher TF). smaller timeframes are tradeable but mostly affected by market noise (throughs and peaks). personally I don’t take partial profits and I trade higher time frames (once daily) because I have a day work. But I am sure it work for other traders though ;)

    • Raul Lopez

      I completely agree with you Cassyd!!!

      Have a great weekend!

  • Alex

    Tks for your input raul. I think that sometimes you do need to take partial profits as it has happened to me more than once that itake a trade with lets saya 100 pip tp target, the market moves 50 pips in my favor or 60 and i think that i made a good decision only to see the market retrace back and stop me out with a negative 15 or 20 pips ending with a loss. If i would have taken partial profits, at least i would have covered my loss.

    • Raul Lopez

      Hello Alex,

      Yep, you are right… Its a difficult decision Alex…

      This is how I see it, if you are actually taking a trade, you would expect the market would move more times on your favor dont you? And if it does move more times on your favor, then you’d make more money by holding your entire trade…

      Maybe one possibility would be to move your SL to the break even level (as long as the market has enough room to breath)… instead of limiting the profit potential taking partial profits…

      What do you think?

      • hira

        I agree that is very very hard to execute – it will only burn you in the long run … … so set and forget trading is much more affective . hit stop loss or target , I bearly even move to break even these days as a lot of the time it comes back to the break even point to collect , so I just leave it now if signal is invalid its invalid simple as that …
        there is such a way I use to exit but only only using counter daily candle stick pa … at key level … to exit partially … this is only time I take partiall profits

        • Raul Lopez

          Hello Hira, yep, that’s the way to go!