One of the most common mistakes of trading currencies is overstaying a position, or simply failing to take profits at a predetermined level. There seems to be a natural law that the market is only going to allow one individual so much money before it starts to take it back. Yet, it is when you have these profits, especially real profits in your account that you often try to get the last nickel out of a trade. If the market meets your profit objective and you are in the trade without an exit order, then you are overstaying your position... period!
All too often the market breaks sharply through your “mental stop” and you watch as your profits disappear before your eyes. Then, you decide to hold the trade hoping for a small rally and the market never rallies enough. The trade profits fall back to break-even, and now you really begin to hope. Next thing you know, you are sitting on a loss. Be aware that a large profit can turn into an even larger loss.
The only exception to this would be if price action were moving strongly in your direction. In this case, you can move your protective stop to your profit target or use a
trailing stop.
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