If you want to learn how to extend profits to improve your trading performance, it's easier than predicting the market's direction. You may find it difficult at first, but with practice, you can become a successful trader who extends profits.
Reasons for extending profits
The reason for extending profits is to optimise profitability. This is because no trade is 100%. Trading does not guarantee that you will make money in proportion to the number of trades you make, so you need to make sure that you maximise profit on the winning trades.
The risk-reward ratio is key to remaining profitable in trading. You remain profitable by making your average profit higher than your average loss. You trade to make money, so it's worth developing the habit of extending your profits.
Why can't they increase profits?
All traders trade in the hope that the market will do what they want it to do. Successful traders understand the need to control their emotions, follow a trading plan and strengthen their trading mentality. On the contrary, being happy or sad with every trade is just poor decision-making and emotionally draining.
Holding positions based on emotions shows a lack of mental control. If you have mental control, you can follow the rules until you close the position. It's also a sign of the level of trust you have in your trading plan.
Characteristics of traders who do not extend their profits:
Thinking after entry
Get excited when the price gets close to the target.
Panics when the market reverses before the target
Hurriedly takes profits, but then the price returns to the original target value.
Characteristics of traders who can increase profits
Thinking after entry
Remains calm when price approaches target
Does not change the trading plan if the market reverses before the target is hit
Waits patiently for the price to reach the target without changing the target value.
Mental control is essential to suppress the desire to lock in profits as soon as possible. Mental control takes time to achieve. Some traders take up to 10 years to master it. It is easier said than done, but it is that much more difficult to discipline yourself and keep at it.
Also, learning to focus on increasing profits in a short period of time can result in poor trading results. To be able to make money in trading, you need to follow a trading plan and develop the habit of patiently following the rules until the price reaches the target. With practice and improved risk rewards over time, you will become more profitable in the long term and realise the benefits of increased profits.