Saturday, April 25, 2015


Let’s say that I find a great opportunity to go for 10 pips on a trade. I submit a market order, to buy the EUR/USD at 1.2900. I set a stop at 1.2880 (20 pips) and I do not set a limit order.
I am now long (because I bought) the EUR/USD at 1.2900.
When the price that I can sell at reaches 1.2910, I have earned 10 pips. I can either exit the trade with my profit, or stay in the trade longer. Here is how I stay in the trade:
I move my stop to break even. If my initial stop was 20 pips (or, on this trade, at 1.2880), then I move my stop to 1.2900. That means that if the price falls back to 1.2900 my trade automatically closes and I have lost nothing. I have gained nothing. I have traded defensively.
But if the trade goes to 1.2920, and 1.2930, and beyond, I am prepared to get more money. I can lose nothing — I am in a 100% risk free trade. Now I can let my profit run and I don’t have to worry about anything.
Many traders ask me why I would do something like that. Why would I accept a break even trade? My answer is a question:
Out of 10 trades, would you accept 5 break even trades, 2 losers of 20 pips, and 2 winners of 50 each? I would. That’s trading defensively, and it’s what I want you to do.

How do you know when to just get out with 10 pips? I say, get out with 10 pips any time you want. It’s ok to just take 10 pips.
How can you make money if your stop loss is at 20 or 30 pips and your gain is only 10 pips? You’re not going to

take 10 pips every time. This is not going to be your only trading strategy. This is one part of your trading toolbox. Other types of trades that you will take will get you more than 10. Lastly, remember that you are going to move your stop to break even sometimes and go for more than just 10 pips.
That said, I have taught traders who have learned to trade for 10 pips of profit more than 90% of the time.
They have made a lot of money going for small gains.
If you earned 10 pips every day for the next 12 months, and you started next year with over $100,000 in your trading account, you could be making between $10,000 and $17,000 per month trading (depending on your risk tolerance – remember, you can choose how many lots you trade). Can you do this? Absolutely. Can you do this today? Maybe, maybe not. You have to dedicate yourself 100% to learning how to trade intelligently.

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