Are Open Profit / Losses Part of the Process?

Are Open Profit / Losses Part of the Process……….

The best trend trades are going to end eventually.

You can’t know when.

And you can’t determine when the corrective dip is no longer a correction and becomes a trend reversal.

Nobody can predict the top.

So why get upset when knocked out of a profitable trade?

Giving back some open profits is part of the process. New traders, being human, tend to feel disappointed.

They need to look at the bigger picture.

Of course the alternative is to apply a ‘profit target’. But that’s a misnomer because it doesn’t allow the opportunity to ride a trend right through to its completion. 

You can’t make large profits by taking small profits.

How many times have you taken a profit, only to see the trade keep going, and going, and going…

A trend follower, with the right strategy, can ride a trend right through completion. But can only do so by riding each corrective dip. Trends aren’t linear. They ebb and flow.

And when price action finally exhausts itself, you will give up some of those open profits.

It’s inevitable.

It’s like travelling from one side of Sydney to the other and stopping at traffic lights.

It happens. But you still get to your destination.

Do not micromanage positions, which is tempting when profits are presented.

It’s when emotions can get the better of us.

If you have planned your trade, and entered your trade exactly as per your strategy, then well done!

If you have applied your risk management exactly as per your strategy, then well done!

If you have been stopped out for a profit, then congratulate yourself.

That’s your job as a trader – following the process.

So don’t admonish yourself.

Be happy with what you have made, that you followed your process and not tormented about the open profits. Giving back open profits is part of being a trend follower. Accept it then move onto the next opportunity.