Forex: Trade Management

Hey All,

One of the best part about forex trading is that the vast market liquidity allows for very accurate trade management strategies to be employed.

Forex traders would have probably heard of the saying "Keep your losers small and let you winners run". Here are some examples of what it means.

Example 1:

You entered a trade at 1 standard lot ($10 per pip) with a stop loss (I'm a firm believer that you should ALWAYS employ stop losses) of 100 pips (equivalent to $1,000). The trade moves in your favor 50 pips and now you have options to either:

1. Move your stop loss to breakeven, which means that you are totally risk free for this trade. At worst, if price reverses to your entry price, you would have made no profits and no losses.

2. Take partial profits i.e. Close out half (or any amount) of the position at 50 pips profit and let the others run.

The above are only two examples of how you can manage an active trade, there are probably as many variations out there as you can think of.

Example 2:


Here's how one of my trade buddies, @piptee does his trade management which he calls the "I Don't Care Entry". Click HERE for the article.

Mastering the art of trade management will greatly improve your trading. As Alan Farley puts it, "Experienced traders control risk, inexperienced traders chase gains".

I hope this will help you come out with some ideas of your own. And when you do, why not share them here as well?

Happy Trading,
Leo

Happy New Year 2010!!!

Hey guys!

Just want to take this opportunity to wish everyone an AMAZING 2010 with loads of joy and success!!!

How is everyone's New Year? Any resolution for the year ahead? Share it with me so I can cheer you on! Those of you who have been dropping by to this blog might have noticed that there are some changes to the blog layout. The change is basically to cater to a more efficient and organised blog. An even bigger change is that I now have my own domain name at www.forexandlife.com! The reason this domain name was chosen is because it accurately reflects the original intention of the blog, which was to share with you guys my journey on trading forex as well as some of my random thoughts about life.

While the previous URL www.theforexguy.blogspot.com still works, please change your bookmarks and links to www.forexandlife.com to accurately mark the new change.

Lastly, I have included a couple of ways where you can contact or keep in touch with me either through Facebook, Twitter, RSS or e-mail. So if you have questions, interested in guest blogging, or just to say hi, do feel free to drop me a note.

Thank you very much for being part of my journey so far. Here's to an abundant 2010 to all and may we make lots of pips together!

Cheers,

Leo