Letting your winners run is another misconception that holds many traders back.
It is preached and pontificated as the ultimate fix to your trading. The people who say this, as if it were some magic potion, usually have no idea how or why you trade.
‘Cut Your Losers’ is a natural follow-up to my previous ‘trading lore’ article. Here we have another cliché, frequently used in the game of trading and investing.
Trading with high reward-to-risk. This is one quote you’re guaranteed to have seen bandied around.
In the trading and forex community it’s commonplace to see ‘trade with at least 3R so you can afford to be wrong more often’. (3R being a reward of 3 times the risk taken)