Warrior Trading Blog

Three Stratagems For Holding the Winners

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Three Stratagems For Holding the Winners

 

As traders whom have approached this practice as an actual profession, we all know that everything comes down to a simple concept which is the most significant, the core that makes the difference in any trader’s career.

This is risk management. I know we say it many times but it’s the most important notion to make your own, so it’s definitely worth be reminded about.

By digging a little bit further into risk management, there are two apparently simple aspects to consider in order to be profitable in the long run and I’m sure you’ve already heard of these ones too. They are the following ones: minimizing the losses and maximizing the winners.

This is what ensures that each trader makes money in the long run, assuming one is right only just fifty percent of the times (in same cases even less than that!).

While the main focus is about cutting the losses in order to keep them tight and there are plenty of amazing contents talking about it, usually there is not the same amount of resources spent about techniques to maximize the winners.

To me, both of the concepts are equally important and given the fact I feel there is a little imbalance in favor of how to minimize the losses, here I am to give you some tips to hopefully help you getting the winners bigger.

 

Everything comes down to having planned the trade

Personally, I’ve been able to identify the following three top tips for maximizing the winners, here they are for you:

  • Make sure your profit point is twice as distance than where your stop is (also called a 2:1 P/L ratio, read more about P/L ratio definition here). About this, everything comes down to having properly planned the trade so that once you’ve identified the possible entry, it is going to be easy to know where the stop is and to quickly measure if the distance to the target justifies taking the trade;

 

  • Scale out of a winner in order to leave a piece for the bigger move instead of just closing the whole trade once the first target has been reached. Read more about scaling in and out of a trade in my previous article here;

 

  • Exercise patience because some setups just need a little more time to resolve favorably. So, unless you get a clear stop signal, just let the trade enough time to work out. I know it doesn’t sound like a hard-core technique but I think it is as important as the other two above. It will require a little more time to develop the skill of sitting tight and wait for a trade to come to you but once you’ll have turned that corner you’ll have pretty much reached the ultimate goal. So, it’s definitely worth putting enough effort into this one skill too.

 

At the end of the day, being a trader, it is a daily psychological battle. The best point is that our brain is a sort of muscle. And the more you use it, the better it gets at recognizing things like setups, technical levels and price  action.

So, do not get scared if everything seems too complicated at the beginning, soon enough everything will click and you’ll be ready for the next level. Meanwhile, just do not give up, do not overexpose yourself and do not take unnecessary risks.

 

“Winning is the most important. Everything is consequence of that.” – Ayrton Senna

 

See you in chat-room.

 

Trade safe,

 

Roberto Barbaro