In the world of trading, the importance of actively managing your open positions can’t be overstated. Having a well-thought-out plan is crucial, but so is the ongoing oversight of your trades.
Let’s go through three valuable tips to help you manage your active trades more effectively.
### 1. Stay in Tune with Market Movements
Whether you lean heavily on technical analysis, prioritize fundamentals, or find a balance between both, it’s undeniable that economic reports can steer price movements. Keeping an eye on significant events that could impact your trades is essential.
Some argue that the market’s reaction to news is often more critical than the news itself. However, to capitalize on these reactions, you need to be informed about the underlying events. Don’t overlook potential game-changers that could wholly alter or disrupt your trading strategy.
### 2. Adapt Your Trading Plan
If you’re familiar with the insights from the School of Pipsology, you already know the value of flexibility in trading. Flexibility doesn’t equate to being haphazard or disregarding your initial plan; rather, it involves making calculated adjustments in response to evolving market factors.
To remain flexible, continuously reassess the validity of your setups as time goes by. Bear in mind that the longer your trade remains open, the more susceptible it becomes to various market events.
Reflect on your initial plans for holding a trade. Does your setup hold true after several hours, days, or even weeks? Imagine you identify a potential double top on the AUD/USD as a day trade. You enter a short position at the top, expecting a price drop. However, after a few trading sessions, the currency pair lingers around your entry level. Is your double top setup still valid, or is it time to secure profits?
### 3. Adjust Orders and Position Sizes
Even with the perfect reward-to-risk ratio and a solid trading plan, there’s still room to fine-tune your order levels and position sizes to limit risk. If certain elements of your plan aren’t aligning with your expectations but the overall idea seems promising, consider reducing your position size.
Conversely, if the price movement beats your expectations, you could adjust stop losses or take partial profits. Ideally, these adjustments should be part of your initial plan, but adapting on the fly is better than not at all.
Remember these straightforward tips when trading. They’ll help ensure you don’t squander your meticulously crafted plans, and before you know it, these strategies will become ingrained habits.
