Today I had a conversation with Bill Poulos, I posed that question to him. This is what he said? “most forex traders wait too long to move stops to protect their positions and frequently watch their profits disappear.”
And that wasn’t all — he continued, a simple concept, similar to Gambler’s Ruin that permeates the forex trading world.
Here’s a typical scenerio, once a trader sees profit in a trade begin evaporating they get solely focused on getting back the lost profits. They forget to see the need to protect the profits that they still have in the trade. The result? A reversal continues, the once-profitable trade becomes a losing trade and the trader’s frustration mounts.
I’ve seen this myself and it’s the easiest trap to fall into, because you convince yourself that the Euro just hit that intra-day high and it can get back up there! Except – it doesn’t and it continues to pull back until your 20 or 30 pip gain turns into a 20 or 30 pip loss.
That’s a pretty severe example – but have you had that happen to you?
What is a forex trader supposed to do?
Bill had an answer for that, too!
He said most traders don’t know what the available profit potential is for any single trading event — that is, they don’t set profit targets which allow them to take what the market gives them and then exit the trade in multiple steps. And, without a strategy that protects capital first and manages profits second, there’s no way the average forex trader can survive in the foreign currency markets.
In order to position yourself correctly, traders MUST have a multi-part strategy — one that teaches them how to identify the BEST available trades, clearly sets out a profit target, helps manage the taking of those profits and from the outset, teaches traders how to protect their precious capital!
He calls this managing risk first, taking profits second – and it’s really groundbreaking thinking.
Watch the first part of his new, free video series on this right here:
Forex Training Courses Video
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