Hello to you plunt and welcome to the thread. Thank you for your question. It links nicely into what we debating last week.
There would be absolutely nothing wrong with taking some profit going into a market moving announcement. Some will decide to do so, others won't. It all depends on your individual tolerance for risk set against your appetite for reward.
Let's think this through for a moment -
OK, so I am 140 pips in profit, with a stop at breakeven. If I get stopped out, my account balance is the same as it was before I started, but I will forgo the 140 pips floating profit. What is my maximum downside? The floating profit is gone, but my account balance stays the same.
As we were discussing last week, some people will view this as 140 pips lost - others will see it as breakeven, i.e. no loss. There is no right or wrong answer to this, it is a matter of personal interpretation. I prefer to look at it as no loss, because I like to keep an eye on the bigger picture.
So the downside is capped at a level we know and are comfortable with. What is the potential upside during this market moving event? Well if the market moves in our direction, it has the potential to move a significant distance, much, much, more than 140 pips.
On some occasions the news will go against me and I will lose those floating 140 pips and I get stopped out at b/e.
On some occasions the news will go for me, and my gain will be multiples of my losses on the other losing occasions.
Cut your losers and run your winners.
Is that a blind gamble? Of course it is - everything in the market is a gamble - anyone who tells you otherwise is pulling your leg. The question is are the odds in our favour and is it a gamble worth taking? For me the answer is yes, I take that gamble every. single. time.
