Posted by: joetradingplace | April 22, 2015

Cutting losses

Remember the post on managing trade, this post is taking you step by step on how i manage trades and cut my losses. Remember the cadjpy long and short usdcad trade i took because price has broken out of a range. I then said that when price breakout, i expect it to follow through sooner than later, but if you look at the two pairs yu can notice that price hasn’t followed through…and to me it is a first sign that it might be a FBO…so i have to manage my risk accordingly.Looking at the cadjpy chart, I have moved my SL from below the red line to nearly 10 pips away from my entry…so initially my SL was about 100 pips…notice how I have cut my risk to nearly zero. Look at the usdcad chart, my SL was just above the broken red support and now I have halved it. So the worst case scenario now is that my loss will be about 0.6% on both trades..my risk has been reduced from 2%. If price moves in my favour, i will quickly move my SL to Be, further cutting my loss. I don’t care if the market stops me out and continues in my direction, my main focus is on managing my losses. Price hasn’t done what i expected it to do, so there is no need for me to be fully committed to the trade.

Screen Shot 2015-04-22 at 13.01.55

Screen Shot 2015-04-22 at 13.10.17

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