Every trade should have its own corresponding management. In fact, you should already have ideas and plans in your head what to do before placing your orders. And when we say ideas and plans, you should have one for each scenario that can possibly happen. Think long and hard about every possible situation and think about how you would react and fix the problem if it arises.
Let us cite possible scenarios that can happen.
Let us say that in one scenario, you planned and managed everything before everything else. You have a high chance of taking home a hefty amount worth of profits. Yes, there is also a chance of losing. However, you will only have the most negligible possible losses because you already looked ahead and got ready if a problem comes along the way.
Let us talk about another scenario. Let us say that you did not make any plans, but you will trade anyway because you just felt lucky today. You entered the trade blindly, just like how you would play darts with a blindfold on your eyes. You really are fortunate if you actually won the trade. But if the price, unfortunately, went against your favor, you might end up having significant losses if your account did not get wiped out.
These two kinds of scenarios tell us that entering a trade is one thing, but exiting is another. In fact, the exit part may even be more challenging than the entry. You should know what to do in tough times. It would help if you had your cards prepared before everything else so you will not have to make terrible decisions in haste while in the middle of everything.
Taking the trade
If you decide the trade after weighing all the essential factors, you must already have plans laid out before even considering placing the order. This is how trading management works! Being proactive is everything. Proactive in the sense that you do not wait for a problem to happen before thinking about the solution. It’s just like bringing an umbrella as you go outside when you do not know whether it will rain or nor or you just do not trust the weather forecasts.
If a problem arises
An intelligent trader will know the answers to any question such as:
- Location of stop-loss
- Profit target area
- Will you trail your stop?
- Where can you exit if you want to exit early?
- What will you do if the price went against your favor?
The trader should have answers on the spot or a reference guide about which action to take about any situation.
Trading as we know it
Trading will always be unpredictable. It is a given fact. However, it does not mean that it is impossible to win. People do forex trading management for a reason, and one of those is becoming successful. However, success does not depend on luck alone. It depends on hard work, motivation, determination, and disciple.