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Al mentioned: "As trend continues, it gets far from stop, risk is greater. Institutions must prevent risk from getting too big. Popular way is to reduce position size by taking profits."
I don't understand how risk becomes greater.
if entry price was $10 and stop is $7, risk is $3. why does it matter if market is now at $20 ? isn't my risk still $3 ?
Your risk is $13. There is no other money. All money on your account is yours.
What Philipp said is what institutions do as well. They have a maximum risk tolerance so at some point they have to reduce their position. Treat your money in your account as yours and protect it, even if it's still unrealised.
I suggest to watch 36A where Al further explains this concept
The risk that AL mentioned is if institutions buy higher price when trend continues they will bear more risk, say the trend starts from $10 and keep up until $30, buy at $15 the stop is $10, buy at $28, the stop is also $10, so the risk is greater when traders buy at late time in the trend.Al mentioned: "As trend continues, it gets far from stop, risk is greater. Institutions must prevent risk from getting too big. Popular way is to reduce position size by taking profits."
I don't understand how risk becomes greater.
if entry price was $10 and stop is $7, risk is $3. why does it matter if market is now at $20 ? isn't my risk still $3 ?
