When the trade is going in your favor, what do you do? Do you wait until the pair hits your Take Profit goal? Extend the band? Or just take the profits and call it a day?
1) Sticking by the original plan has its advantages. First, you take no additional action that can trigger even more additional action afterwards. Changing your Stop Loss and Take Profit orders consumes time, adds to the pressure and most importantly: you’ll lose the lesson.
Analyzing a trade that has been altered many times is quite hard. Did you stick to the plan or not? Will you able to repeat these moves again? If you’re able to analyze it, make it into a plan that you can repeat afterwards and execute successfully time after time, you’ve got a winner.
But in many cases, making changes when the position is open, isn’t always rational and cannot be repeated. This can be messy.
So, perhaps you’re better off just sticking to the plan and letting things happen.
2) Extend In some cases, you are tempted to extend the Take Profit order in order to increase the profit. This risks losing the whole trade. You can see the currency pair hit your original target, but not reach your extended target. It finally retreats and hits the Stop Loss order. Hopefully you haven’t extended your Stop Loss order in the losing direction.
Bad luck? Not exactly. If you are convinced to make this move, it is better to move your Stop Loss order in the same direction. Moving the Stop Loss order to prevent a loss in the trade will let you either take a bigger profit, and in the worst case scenario, you won’t lose.
Moving the Stop Loss order to 0 profits is a minimum. Moving the Stop Loss order to a profit of the size of your extended Take Profit order will be even better – you’ll secure a small profit and perhaps take much more.
3) Calling it a day: If you’re in profit and somewhat nervous and aren’t certain what to do, perhaps you better close the position. Right here, right now. You’ll earn the certainty of knowing your exact profits.
The disadvantage is similar to that in the previous scenario: you’ll lose the lesson, as you didn’t stick to your plan, but at least you didn’t lose the trade and saved some time.
Time is also money: time enables you to analyze, to get away from the screen and to have the necessary energy for the next trade.
Do you move your Take Profit Orders?
Further reading: 5 Most Predictable Currency PairsGet the 5 most predictable currency pairs