Japanese boat jump risk management technique

It can be applied to trading too, I tried to enbed the youtube video but i couldnt so i will just post screenshots

A Japanese man is rowing a boat with tourists when they get to a bridge that is very low, so the tourists bend their heads. The boat man cannot bend his head because he is holding a very long stick. So, he does something ingenious to manage the risk of him hitting his head on the concrete bridge.

He abandons the boat and climbs unto the concrete bridge

He crosses the bridge by foot and jumbs back into the canoe from the other side of the bridge.

So many times as traders we are faced with a similar situation where danger is approaching and we dont know what to do so we panic and shift our stop loss to accomodate more danger. From this jaoanese technique, one way to manage the risk is to exit the position, and re-enter it when the danger clears.

Let us look at a practical example, on the charts there is an upward trend but after price crossed the pre-frankfurt hour high a bearish candle formed which shows a danger of reversal of trend just like the danger the bridge posed to the boat man. A way to manage this risk is to close the buy position (exit the boat), wait for price to close abover the red candle (cross the bridge on foot), then re-enter the buy position when it does( jump back into the boat). Hope this helps guys!

This is good risk management @tony and I think it relates to the advise that it is better to wait for a river to flow before joining it. So many times as traders, we take unnecessary risk holdng on to uncertain trades when we could just exit for a small loss, and get back in when the trend resumes.

very good strategy, to exit a trade when the loss is small then wait for the market to move in your direction before you reenter, you may sustain a small loss but you avert a bigger loss.

I was in a short trade today and when i saw price was going upwards i quickly exited for a small loss. if i had not exited, I would have been forced to accept a bigger loss because price kept going up. I have now placed a sell pending order below to reenter when/if price starts falling

Smart move exiting that short trade quickly for a small loss instead of letting it run into a bigger one. Protecting capital is always priority number one, well done.

I got back in the trade when price started falling and I exited with profit at the end. So, there's nothing wrong with taking a small loss in the beginning.

So, this was the jump!

This technique is underrated, and is very good. When the boat man jumped onto the bridge, it was like closing a losing trade to cut losses early.