Trading is often portrayed as a game of strategy, technical analysis, and discipline—this is true, but there’s a vital aspect that often gets overlooked. Many traders lack a clear plan for managing positions, especially when the market moves unexpectedly. What should you do if the trade turns against you? More importantly, how should you respond if the trade moves in your favor? These are the questions that define success.
The market’s dynamics can shift in an instant, so having a strategy in place before opening a position is crucial. If you’re uncertain about how to act in changing conditions, it’s better to avoid trading altogether or close all positions, even at a small loss. The ultimate goal is not just to seek profits but to manage risks effectively. A fundamental strategy lies in breaking even—covering the costs of entering and exiting a position by adjusting your stop-loss to the breakeven point. Deciding when to make this move depends on your trading style and tolerance for risk.
For instance, when using high leverage, I adjust my stop-loss as soon as the position gains 25-50-100% to lock in profits. With lower leverage, I wait for key levels to be reached. Another essential tactic is scaling out of profitable trades. Large-scale investors don’t close million-dollar positions all at once. Instead, they reduce positions incrementally as the market moves in their favor. Following this approach not only secures profits but also allows you to stay agile in a volatile market.
Take my recent trades on $ADA as an example. A position opened with 74x leverage reached a 100% profit. I promptly moved my stop-loss to breakeven, securing the position’s cost. Later, as the price hit the Fibonacci 1.618 level, I reduced the position by 25%. Though the market eventually reversed and hit the stop-loss, there was no loss incurred. Similarly, another position reached 100% profit, prompting a breakeven adjustment. Options now include setting the stop-loss at a 5% profit or reducing the position further while aiming for Fibonacci targets at 1.618, 2.168, and 4.238 levels.
This disciplined approach ensures that even if the position is closed, it’s done without losses, preserving capital for the next opportunity. By focusing on risk management, you turn potential setbacks into lessons and prepare yourself for long-term success in the market.
