Forex,  Investment

Partial Profits Or Single Target Trade Management?

Is Partial Profits Or Single Target Forex Trade Management Right For Your Trading Personality And Goals?

Partial Profits or Single Target

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When you place a Forex trade, is partial profits or single target the right Forex trade management strategy? That is the question we’ll be exploring in this post.

Partial profits trade management is when you close a portion of your position at a certain point of profitability, and let the second portion of the position continue to run. Single target trade management is when you maintain the entire position for the duration of the trade.

I know what you might be thinking, “Just tell me which trade management strategy, partial profits or single target, is MORE PROFITABLE, and I’ll trade that way”.

Well hold on, Forex trading is not that black and white, and there is a lot more than you might think to take into consideration. So, let’s explore this issue deeper and find out how I deal with this issue inside PMTW Full Access Pass.

The Overall Goal Of Forex Trading

When talking about Forex trading, most people think the ENTRY is the most important part of a winning strategy. And yes, it is important. But in order to be profitable over the long term all the components of the trading strategy must work together.

Trade management after your trade goes into profit is very important.

Now, here is something that a lot of traders don’t talk about…

The goal of your Forex trading should be TWO pronged:

  1. The trading strategy should be profitable when traded over the long term. (obvious)
  2. The trading strategy should be able to be traded as closely to perfect over the long term under the emotional strain of having real money at risk under live market conditions. (not so obvious)

Most traders just focus on profitability. They want to trade the way that is “most profitable”. Makes sense.

But what happens when trading in a way that is “most profitable” leads to a large emotional strain that makes it difficult to trade the strategy perfectly?

A “perfect” strategy, traded imperfectly, will not produce the desired results.

The overall goal of Forex trading is a balancing act between profitability and managing the emotional challenges of trading. The goal is to find a way of trading that is both profitable AND can be traded as close to perfect as possible over the long term in the live markets.

This is where the question of partial profits or single target comes in.

Why Taking Partial Profits Is Better

Trading the Forex market is difficult. Even when trading in a way that has been strategically designed to be profitable over the long term, the market does not always cooperate. 

Sometimes, you get into a trade and everything starts going your way. The market is moving towards your final target and you are seeing some nice uncaptured profits in your account. Happy, happy times.

Then BAM.  

The market reverses, eats up your uncaptured profits and you get out of the market with a very small gain, or in the worst case, a loss.

Just think about how that feels emotionally.

You are kicking yourself for not getting out of the trade with more profit. I mean, the profits were right there… but you didn’t get them. (What these feelings are really doing is telling you you should have broken the rules).

Taking partial profits can offset these negative feelings and help you stick to the trading rules.

In the same trading scenario as above, imagine taking partial profits at some point in the trade. This means the trade is already profitable and you put some money in your account. Therefore, when the market reverses and you get out with less profit… you don’t feel as bad.

The good thing about taking partial profits is it makes trading according to the rules easier on an emotional level.

When you get into a trade you have money at risk. This is stressful. But once you take partial profits, you have already banked some money and you feel great about the trade.

Taking partial profits is better because it can reduce the emotional stress of trading, making it easier to stick to the trading rules over the long term.

Why Single Target Is Better

So, let’s say you are using the partial profits strategy to reduce the emotional stress of trading. Well, reducing stress comes with a cost. And that cost is potential profits.

Imagine getting into a trade and everything is going your way. You take partial profits to reduce stress and you are pretty pleased with yourself.

Then BAM.

The market keeps going and hits your final target. Well, dang it. If I didn’t take partial profits I would have made a lot more money on the trade.

You are kicking yourself. Why didn’t I just let the trade run? (What these feelings are really doing is telling you you should have broken the rules).

The good thing about using the single target method is winning trades can be more profitable because the entire position can reach higher targets. While this way of trading can make your trading more profitable… It comes with a lot of added stress.

Using a single target is better because it can be more profitable over the long term… and isn’t that what trading Forex is all about?

Partial Profits Or Single Target?

Here is what inexperienced traders want, and even expect.

They want to be able to know WHEN to use the partial profits or single target trade management method for maximum profits.

They think the trader should KNOW when a trade is going to stall and when it is going to run and be able to trade each trade in a way that produces maximum profits. I mean, wouldn’t it be great to know how far the move will be so we can take profits at the highest profit level?

Yea, trading does not work like that.

As traders, we try to put the odds in our favor. But we are not clairvoyant and see into the future. The unknown future unfolds for us at the exact same time it reveals itself to everyone else.

So, what do we do?  Partial profits or single target?

Well, remember the goal… 

The goal is to trade profitably over the long term by trading according to the rules as perfectly as possible under the emotional stress of having money at risk.

Taking partial profits is easier to trade emotionally. Once you bank some money, trading is a lot less stressful. (I would not underestimate how important and valuable this is).

So, if you find yourself stressing out and deviating from the trading rules while in a trade, partial profits is an excellent solution.

However, the single target method does have the potential to be more profitable. So, if you can handle the added stress of trading this way, it can work in your favor over the long term.

Either partial profits or single target trade strategy can help you accumulate wealth faster so you can reach your financial security goals. As long as the trading remains profitable over the long term… the trading method is valid.

Final Thoughts

Partial profits or single target does not have to be an either/or situation.

Too often, people ask me just to tell them the MOST PROFITABLE way of trading. And they get disappointed when I tell them I don’t know… and nobody does.

  • Sometimes the partial profits method will be more profitable.
  • Sometimes the single target method will be more profitable.

Therefore, do BOTH. Trade the partial profit method and single target methods on different accounts and get the best of both worlds.

Over at PMTW Full Access Pass, I provide Forex signals. I now provide Forex Partial Profit Signals and Forex Single Target Signals. Subscribers can either choose one or the other… or do what I do and trade both.

There is absolutely nothing wrong with having multiple income streams working together… As a matter of fact, this is the preferred way to do things.

Trade profitably over the long term in as many ways as possible. That way, no matter what happens, at least one of your trading methods will be “the most profitable”.

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Edward Lomax

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