Trade Management Systems: Comparing Two Methods
📌 Method 1 – Normal SL & TP
Entry → Open trade at ENTRY.
Stop Loss (SL) → Fixed (below ENTRY for buy / above ENTRY for sell).
Take Profits (TP1 & TP2) → Both active.
When TP1 is hit → Book partial position.
SL stays the same → risk remains on the rest of the trade.
✅ Advantage:
More potential profit if market extends to TP2.
❌ Risk:
If price reverses after TP1, the remaining position can still hit SL → reducing overall profit.
📌 Method 2 – Breakeven Stop (SL = ENTRY after TP1)
Entry → Open trade at ENTRY.
SL initially fixed.
When TP1 is hit → Book 50% profit, then move SL to ENTRY (breakeven).
Remaining position:
If TP2 is hit → book extra profit.
If price falls back → exit at ENTRY (no loss).
✅ Advantage:
Trade becomes risk-free after TP1.
❌ Risk:
Sometimes market hits TP1 then pulls back, causing breakeven exit → missing bigger gains compared to Method 1.
📌 Enhanced System (Your Version with Fixed Risk)
Initial SL → Always set at 2R.
TP1 → When reached, book 50% profit (+1R on half).
Then move SL to ENTRY (breakeven) for the remaining 50%.
📊 Possible Outcomes:
Scenario Result
Price hits SL (before TP1) –2R loss
Price hits TP1, then reverses to ENTRY +0.5R profit
Price hits TP1, then TP2 +2R total profit
⚖️ Summary
Method 1 (Normal SL & TP) → More profit potential, but carries more risk on the remaining position.
Method 2 (SL = ENTRY after TP1) → Safer, risk-free after TP1, but sometimes cuts off bigger gains.
Your Enhanced Version → A defensive system:
Losers are limited (–2R).
Small winners (+0.5R) happen often.
Big winners (+2R) balance out losses.
💡 With consistent discipline, even a 40–45% win rate can make this system profitable.
