The 5 Outcomes Of a Trade | How not to blow your account
Successful traders know there are 5 outcomes that can come out of a trading position. When managed well these outcomes can lead to great success. However, when manage badly can cause disaster to a trader’s account.
Below I’ll highlight and discuss the possible 5 outcomes of a trade and how you can manage them.
1. Small Profit
This is when a position ends in a very small profit, for trend traders, this is usually the case. However, in this situation, there is no loss.
2. Small Loss
This is when you lose a small amount at the close of your position. This is part of normal and good trading. In fact, you should cut your losses early. Taking small losses or cutting your losses early will help you stay in this business long term.
3. Breakeven
This is a position where you really didn’t make or lose any money. They’ll come too, they are not necessarily bad trades. These types of trades may just mean you should find re-entry to the position or may just be a quick exit without a loss or profit.
4. Big Profit
This is when a position ends in a very big profit. This type of trade does not come too often but when they do come they are the trades that move your general account return for the period to the next level. As a trader, these are the type of trades you should look forward to.
5. Big Loss
This is when a position ends up closing at a very big loss. This type of trade should never happen on your trading account as a pro-trader. This is the type of trade that can blow your trading account. It’s why you should know how to cut your losses quickly and take a small loss.
I’m glad I’ve been able to share with you the possible outcomes of a trade and how you can manage them properly. A simple knowledge like this can suddenly turn your trading account to become profitable.
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