Hey traders, how are those trades?
Later today we’ve got the FOMC minutes, which probably is the most important fundamental announcement from them all…
Yes, even more important than the Non-farm Payrolls report.
So we are going to see some movement, that’s for sure, but the type of movements that we are going to see aren’t tradable… and you know that.
So its a good idea to just watch the market and see how it behaves, close your trades, take out all your orders and relax!
Its always better to see the market moving like that from the sidelines.
Now, talking about something else… Last week I wrote about taking partial profits, its a pretty common strategy among traders and I wrote about why I thought it was the worst strategy ever.
What you are actually doing is hurting your performance as a trader.
Because when the market is moving on your favor, it is actually telling you, you probably took the right decision. Why would you limit then your profit potential by taking partial profits.
Now, don’t get me wrong.
If its part of your trading plan, then its ok to do it.
But if you are taking partial profits just because you are afraid the market is retracing back, that would be a terrible mistake.
But today I want to talk just about the opposite, instead of taking partial profits, increasing your trading size.
Increasing your trading size: How does it work
I want you to picture one scenario…
Let say you decide to go long, the market goes on your favor and hits your take profit order. you make 200 pips.
That scenario is great isn’t it?
But what about this other scenario.
Another trader takes exactly the same trade our first trader took. Just that, this trader decides to increase the trading size exactly half way up. So instead of making 200 pips, she makes 300 pips.
That’s 50% more than our first trader in the same market movement.
Which scenario would you favor?
Obviously the second one…
And that’s what increasing your trading size is all about.
When the market moves on your favor, you keep adding trades to take advantage of the market movements.
To me, it makes perfect sense.
I think the most sensible time for a trade is when you open it, but when the market already moved on your favor, the odds are in your favor…
This is the way I see it, if the market moves by one pip on your favor, it is more likely to hit your take profit order. If it moves by one pip against you, then it is more likely to hit your SL.
So when the market moves on your favor, it would make sense to increase your trading size, and when the market moves against you, it would make sense to take partial losses.
What do you think?
Now, it doesn’t mean that you are going to open trades just because the market is moving on our favor or you think it will continue to move up…
We need a methodology to open new trades, you need to know when to increase the trading size, where to set your new SL and TP levels, etc.
So you need to make a complete plan about it!
For instance, I open new trades only when I get new signals and I have nothing at risk on my first trade(s) – This means that I’m able to move my SL from my first trade at least to the BE level.
Does it make sense to you?
Do you regularly increase the trading size of your trades? Or you rather take partial profits?
What is your strategy to increase your trading size?
Please share your thoughts