• Sunil Mangwani

Trade Management - Live Example


One must treat trading like a business and, like every business, a good trader must have a Plan to make it work. A crucial part of the overall Trade Plan is Trade Management, the primary goal of which is to reduce the risk. Despite being such an important factor in the trading process, it is, unfortunately, still ignored by most traders.

On 23rd September, we identified a Bitcoin divergence setup on the 4hr chart. It met all the necessary criteria for a strong, high probability setup based on our winning combination of divergence, price action and fibonacci ratios. The trade is still live and moving in our favour.

Let's go over the trade management of this setup now.

Chart 1: We identified the setup as per our rules & entered the trade.

Price moved in our favour. (Our technique eliminates most of the unsure trades, raising the probability of success.)

Chart image of BTC Divergence Setup as of 23rd September, defining Entry, Exit and Stoploss based on Fibonacci Ratios
Chart 1 : BTC Divergence Setup - 23rd Sep Entry

Chart 2: Current situation.

Even though price has moved in our direction, it has not yet reached our first target.

But as of now, there could be a loss of momentum as we see a possible formation of a bearish divergence. We really do not know if price will continue further in our direction or retrace & turn our winning trade into a losing trade.

There are always factors beyond our control that could influence the price, but we can control the factors within our control, which is what trade management is about.