Handling A Losing Trade

Since I do not use stop loss when I place my trades, I use mental stop losses. I still believe that a stop loss is quite necessary, but using it after much analysis is a better option. Take the USD/CAD trade which i am in now. Here is the chart:



At the time of writing this, I am down by 48 pips on this trade. And the price is in the region of my initial SL. Now, my way of handling this trade is that I will not close out the trade just yet. 1.0000 shows a strong support region, and I will be placing a long entry at 1.0000 of the same size as the original trade.

There is a potential that price would bounce up at this resistant. When profit from the second trade equals the losing trades pips (basically trade 1 minus trade 2 gives zero), I could close the trade at break even. Or if the move is strong enough, as I believe a buy from 1.0000 would move to 1.0200, I could close my first trade at breakeven, and carry on with trade 2 as usual to my target.

This might not always work, but if you see that beyond your planned stop loss there is another support or resistant zone, this strategy will be applied. Lets see how this trade goes on then..

Cheers!