2-Minute Trick for Boosting Profits
By J. Crawford, LearnToTradeForProfit.com
Today, I want to cover a tip you can learn and implement in about 2 minutes that can help you in boosting profits as a trader.
[For another great trick, grab my Free Rubber Band Reversal Strategy Report]
First, let me explain a quick secret that most people probably don't realize...
The difference between profitable traders and losing traders is often extremely small. It's a matter of a few big trades that they capitalized on, or a few less mistakes or possibly a few tricks they use to boost their gains--one of which I am going to explain in this article.
Here's how it works...
If you are primarily a technical trader, like myself, than you should already be utilizing a "technical stop loss" placement.
Today's trick takes advantage of that type of stop loss placement.
For those that do not use a technical stop, here's the basic instructions for doing that:
You find a key area of support and/or resistance in the market to "hide" your stop behind. Protecting your stop behind market areas helps boost accuracy and keep your trade alive. And it's FAR superior to some of the ridiculous arbitrary strategies taught online that tell you to "always use a 30 pip stop loss" or something similar.
Now, I am going to get to the trick in one second, but first, let me just make sure we understand the technical stop placement so that we can apply the trick.
All we want to do is find a recent area within the market that price has respected (AKA bounced off of) and use that to hide our stop behind...
This way, the market has to fight through a level to get to our stop.
So let's get to one of my favorite tricks for stealing a little profit from the market.
To do this, we implement what I call "The Slingshot Loss Mitigation Entry"
Which is my fancy way of saying that enter a new trade when we get stopped out of our initial trade.
Here's the key:
When the market bursts through a key level, there's about a 75-78 percent chance it will come BACK and retest the broken area.
That means that if our Stop Loss is behind a key area, the market is at least 75% likely to move back if it is able to knock us out of the trade.
We can use that likelihood to help get a little profit back and mitigate our total loss.
Here's how the Boosting Profits works:
Step 1: You Enter a Trade with A Technical Stop and you Hope it's a Big Fat Winner!
IF you lose the trade, you go to Step 2...
Step 2: After the trade goes through your Stop Loss, you assess the over-extension of Price using the RSI
Step 3: If and when the RSI crosses 70 on a bullish run or 30 on a bearish run, you enter a trade in the SAME direction as your initial entry
Step 4: Place Stop a few pips above the close of the entry candle and place Target at the PREVIOUS S/R level
Step 5: Collect the profit to help mitigate the initial loss and now you are on your way to boosting profits.
Let me show you how this works with a real trade...
Step 1: Enter a Trade with a Technical Stop:
Step 2: After the trade goes through your Stop Loss, you assess the over-extension of Price using the RSI:
Step 3: If and when the RSI crosses 70 on a bullish run or 30 on a bearish run, you enter a trade in the SAME direction as your initial entry:
(you want to zoom in here when you are waiting for your entry so that you're not lagging behind the opportunity)
Step 4: Place Stop a few pips above the close of the entry candle and place Target at the PREVIOUS S/R level:
Step 5: Collect the profit to help mitigate the initial loss:
Note that even though the price continued to go up and my initial trade was DEFINITELY the wrong direction, I still got the respect of the market to come back and test the key level which meant a few bucks in my pocket to mitigate the initial loss, which is why I say that this trick will be great at assisting you in boosting profits in your trading.
Depending on your comfort with the strategy, you can even increase size and/or Risk/Reward on this second entry and recover the ENTIRE initial loss, but I recommend starting off small and just trying to get a few bucks back to decrease your average loss per trade.
And there you have it...
A few minute trick that can help mitigate some losses and make a huge difference to your bottom line over the long term.
I hope this little trick was handy for you! And thanks for taking the time to read my blog and please follow what I say so you can be a trader who is boosting profits.
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