Trading a longer time frame helps fit trading into your schedule while you move from day job to full-time trading. Learn to trade longer time frames with 
Howdy Folks,
The bargain day I blogged about yesterday didn’t work out as I expected because GBP/USD never visited the $1.66 handle before selling off, however the trade does provide a good case study for why managing profit is very important. In my weekly webinar I regularly talk about why managing profit is just as important as managing risk. In my opinion you should have a plan for taking profit before you open a trade and it should be as automatic as taking a loss is. Last night’s setup is a perfect example of just how fickle profit can be if you don’t manage it properly. Using the Fibonacci profit target tactics I discuss in my weekly webinar last night’s setup offered a potential profit target of about 180 pips. Maintaining a risk-to-reward ratio of at least 1:3 you had a maximum stop of 60 pips available. Assuming you fired a short trade near the high, say around $1.6570 the numbers worked out for a decent trade opportunity; however the trade got a little wonky overnight.
The profit target would have been at 61.8%, right around $1.6390 and sure enough the market hit that profit target. Unfortunately it shot out of $1.64 this morning like a dedicated shopper headed to a shoe sale. This is a perfect example of why managing profit is important. If you don’t have a plan to take profit you may end up hurting your overall performance. As this morning’s market clearly illustrates, profit is only good for the moment it is offered because if you wait another hour it could be gone. Be happy with what you make when you plan a trade, and trade the plan. Don’t worry about what you could have made; it’s a pointless waste of time.
So Now What?
Now I’m simply waiting for the next setup. Retail sales data is due out for the U.K. tomorrow which might give the pair some reasons to get moving again. It’s at the bottom of an ascending channel right now so perhaps there is some opportunity to the upside. We are toying with a support level around $1.6300 and it doesn’t look like GBP wants to go down without a fight. Perhaps this ascending channel will hold. If not, it could be a strong sell off. Either way I’ll follow price and I don’t really care about all the other mumbo-jumbo.… Stay tuned.
Best of luck,
Ryan
Hi Ryan
Could you quickly clarify the profit targets for me? Why the 61% level? I can’t make the webinars cos it is the middle of the night for me over here in East Asia.
Thanks
Hi Peter,
There are two reasons I use the 61.8% Fibonacci level. First, it places my profit target within an area I know the market is capable of trading at because it is within the rally or sell off that created the bargain day to begin with. I’m not asking the market to go anywhere it hasn’t been in order to make a profit, no new daily highs or lows to chart. Second, it’s just a personal preference. I like to use Fibonacci for profit targets because it’s a clean, systematic way to identify potential profit targets on each trade. The more subjective I get, the harder it is to manage profit, at least in my experience.
Hope that helped, let me know if you have further questions.
Ryan
Hi Ryan,great insight as always,thanks! Hope you do more non premium webinars…would sign up for premium but apart from the odd seminar like yours or Sam Seiden’s l’m yet to see any value in doing so.
How’s the book going??
Thanks again.
Hi Michael,
Appreciate the kind comments, thanks for reading the blog! The book is almost finished, finally! I’ll keep you updated through the blogs.
Best Regards,
Ryan
Thanks a lot Ryan. Looking forward to the book too.