Also known as limiting your profits too early and stopping your losses too late.
This has been researched extensively, and is well known to take a strain on your P/L. Some traders, especially those with a very short time horizon may not really get to experience this effect. But we have probably all been subject to it at some point and from time to time fall into it. The only way to avoid it, I’ve figured, is to have very strict stop and limit rules, if my profit target is 120 pips I shouldn’t be putting a stop of 120, in fact if anything the stop should at the most be less than half. Another variation can be to move the profit limit when the market gets close, especially if it’s a fast move and also move the stop loss, at this point it may become a stop profit. This should give way to riding your profits instead of riding your losses.

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