Okay, so I’m going to just quickly, a long story short, what is the flow. Once you do your analysis, you look at this trade. Okay, this trade looks good. I’m going to get in right now. I think there’s a chance that you will move higher from here. I’m going to buy this stock or this currency or this commodity or whatever. It’s going to move higher from here. And the way I look at it, the next key level, key resistant is going to be at somewhere around this level.
Okay, then. The next thing is: Where is my stop-loss going to be? I’m not sure whether you already know how to find the ideal stop-loss level to go into. Best one I see, I suspect that you probably don’t even really know how to set a stop-loss. That’s the reason why you don’t set a stop-loss in the first place and you allow yourself to actually close those interests late.
Okay? So, before you get into a trade, know exactly where you’re going to take a stop-loss. Possible set it to the automated order, into your trading platform. If not, then you still got to decide a stop-loss price list. Once you decide a stop loss price, you know what is your profit taking strategy and ideally if you are still building up your competency, I would suggest decide on a profit target. Okay? So which means that when you decide, okay, the trade, you know what exactly you are going to enter, where exactly you are going to cut your loss if it drops to that level, and where exactly you’re going to take profit when it reaches that level. Okay? Turn this into a habit. Know exactly first so that when you start, when you get into the trade yourself, tell yourself if it touch this level, I will get out. If it touch the level, I will get out.
That’s all that you need to know. Okay?
And if you practice that long enough, getting up at the level that you predetermined is going to be something that becomes a second nature to you. Okay? So unfortunately cutting losses is a second nature that you need to build so that you will override the first human nature of letting your losing profits drag it up. Okay? So again, once you know your entry price and know your stop loss level, you know where you’re going to take profit, then you need to know how to size your trade properly to make sure that you are not over risky on this particular trade.
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