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G'day traders and welcome to our free stuff video.
This video is going to go through why we shouldn't choke the trade.
What that means is when we have got some unrealized gains and we're yet to take profits off the
table. Should we move our stop loss into a protective
level so we don't lose any unrealized gains? Now basically if you were to move your stop
after price had moved down in your favor and a lot of traders and I should know because
I have trained with a lot of mentors. A lot of them recommend as soon as the price
moves at least six ticks in your favor, to automatically, without thinking about it,
automatically move your stop loss into a protective position.
Either at break even or at one tick into profit. I am sure you have heard this term before.
Now, I am here to tell you not to do so if you are letting your trade go for at least
a decent profit run. If you are only scalping, this method may
not work for you. Although if you have got a pre-set target
level as we do, we know this ahead of time. We actually know this before entering a trade,
we know what out target levels are. So if you know what they are, what I would
strongly recommend is just to be patient and I will tell you when in an opportunity time,
or when is the best opportunity more so to move your stop loss and when is a bad time
to move it. So we will go through that now.
This particular trade here we were looking for a short.
Alright, so we are at the market open. The market has just come up to us but hasn't
quite given us a fill and it is pushing away. What do we do?
Do we cancel the order or do we wait a little bit?
And there we go. We have got ourselves a fill.
Now, how far do we let the trade go before we move our profit, move our stop loss?
How far do we go? Now we have moved.....have a look at that.
That has actually moved over two points. George. Shouldn't we move our stop loss?
Shouldn't we bring it into this level now or do we just leave it?
Well I am here to say no. And I will tell you when we should move it.
Ooh, have a look at that. It has now gone more than three points in
our favor. You are crazy.
Shouldn't we be moving it? Actually, not just yet.
Well, shouldn't we protect it? Have a look if we don't?
The trade is working against us now. Ooh, it has come all the way to break even.
We are yet to take any profits off the table. Well, we can strategically take profit as
we go but I can show you that in our last video of our free stuff video series.
But in this particular video, don't move your stop loss just yet.
Shouldn't we be moving it? Well, here we go.
We are getting some downward pressure. Ooh, look at that.
That is nice. Now have a look at that.
What we have achieved is that we have broken this low.
As soon as that low has been broken, now I would recommend moving your stop loss from
where it is, up at this level here into either a break even, or one tick in profit, or start
to trail it down quite closely. And only then would you do so.
This is the only time that this target has been confirmed.
And these lows have been broken. Alright, we will watch price trade and target
has been reached. Now this is the reason why choking the trade
would have stopped you out at one tick. You would have watched this trade, trade in
your favor after being stopped out. It happens many, many times.
You would have worked the whole two hours here for a one tick profit.
And it happens quite often. So, we will have a look at another example.
We will have a look at this one. This happen on Friday the 7th of December.
Now, in this particular example here, we are looking for a long.
And we put our limit orders in the market at 1412 even.
So we have a reasonable risk to reward as normal.
We have got a nice profit target of four points. Now, again, we will just wait for the price
to pick us up at our limit. We have got a touch and a fill.
Alright that is good. So we are taking a long.
Now, we know that the high here has been established already.
What do we have to do? We wait until our price has broken that level
before we move our stop loss. We wait and have a look at that.
It has gone from a 12, it has gone over two points in profit.
We are at 1414 evens right now. Shouldn't we move it?
As I have said, if you are scalping, by all means.
Move your stop loss into place because you need to protect what you can.
Scalping would only usually entail one, maximum two points.
We go for a lot more in our trading room. Now, if you choke this trade, what would happen?
You would have been stopped out at one tick in profit, again.
And this is why it is critical. If you have got a confirmed target up here
and you know it is likely to trade towards it, do not choke your trade.
Because you will more than likely see after that price has been broken, you can then protect
it, you will more than likely see price being reached.
Alright, and there you go. Now, this is how critical this particular
setup is. I am not showing you the setups today.
What I am showing you is not to choke the trade.
When you don't have enough room on the trade to move .
Price will do what ever it feels like it wants to do.
Only until the price level breaks that previous high on the way to it's target should you
move your stop loss and only then. Anytime from your entry up to that level,
you are not accepting your risk. And this is what we practice in the trading
room. We practice accepting risk.
If we can't accept the risk, we don't take the trade.
But we know this ahead of time before we decide to get into the trade.
So in this particular video what we want to do is really let the trade have enough breathing
space to let it go toward it's target. Choking the trade can often stop you out at
one tick in profit. It happens to me many times and because I
have seen this setup happen so many times I have realized that choking it too prematurely
can often get me stopped out at one tick in profit, if I am lucky to do so.
What I will ask you to do guys is leave a comment down below in the comments section.
I really want to start a discussion and I want to know what you guys think about what
we trade and how we set it up. More importantly I want to know your stories
and about what happens about the trade you are in and we can try and work something out
together if we can. Alright traders, I hope you have enjoyed this
free stuff video and we will see you in the next one.
Bye for now.