Is This Trade Worth Closing the Other One? How Traders Decide Without Regret

Table of Contents

• What is the Core Mistake?
• Every Open Trade Is Competing for Capital
• Steps to Decide Which Trades are Worth It
• Step 1: Compare Risk-Adjusted Returns (Not Raw Upside)
• Step 2: Check Invalidation Strength
• Step 3: Time & Capital Lock-Up Test
• Step 4: Correlation Check
• Step 5: The “Would I Open This Trade Today?” Question
• Three Scenarios Where Closing One Trade Makes Sense
• Three Scenarios Where Closing One Trade Almost Never Makes Sense
• FAQs

What is Your Core Mistake?

You are treating trades as emotional attachments.

The moment you start having “strong feelings” about a trade, your decision-making becomes distorted. The trade stops being a tool and becomes a personal commitment. You no longer assess it objectively. You defend it, justify it, or cling to it, even when better options appear.

Many traders do not realise this is happening. They believe they are being patient or disciplined when, in reality, they are emotionally invested.

Let me give you an example of how this plays out in a typical trade.

A trader opens a position after doing some analysis. Price moves slowly for some time. Nothing exciting is happening, but nothing is clearly wrong either. Then a new setup appears on another pair. This one looks clean and the momentum seems stronger, with a clearer structure. Instantly, tension sets in.

Instead of calmly comparing both trades, the trader starts thinking:

• “I’ve already committed to this one.”
• “If I close now and it runs, I’ll feel stupid.”
• “Let me just hold a bit longer.”
• “I don’t want to admit this was a bad choice.”

This is where most regret in trading comes from. Not from losing money, but from how decisions are made.

Every Open Trade Is Competing for Capital

Every open trade is in competition with every other possible use of your capital.

This is the most important rule traders forget when deciding whether to close a trade to open another.

Once your money is inside a position, that money is locked. It cannot be used elsewhere. It cannot respond to a better setup. It cannot take advantage of sudden momentum. It is simply committed.

This is what makes trading a capital allocation game.

Capital is limited, even when it feels available.

Most active crypto traders do not trade with unlimited funds. They work with a fixed amount, like ₦100,000, ₦500,000, ₦2 million, or less. That means every position matters.

If ₦300,000 is tied up in one trade, that ₦300,000 is unavailable for:

• A cleaner setup on another pair
• A higher probability breakout
• A fast-moving opportunity that needs quick execution

So whether you realise it or not, your open trade is already “competing” against trades you have not taken yet.

The market does not pause because your capital is busy.

This is what opportunity cost trading really means.

Opportunity cost trading sounds complex, but it simply means that, by choosing to stay in one trade, you are choosing not to take another.

So the real question is never “Is this trade good?” It is: “Is this trade the best use of my capital right now?”

A trade can be valid and still be a poor capital decision. 

Steps to Decide Which Trades are Worth It

Step 1: Compare Risk-Adjusted Returns (Not Raw Upside)

Most traders compare trades the wrong way. They look at how much a trade could make, not how much it risks to make it.

Risk-adjusted return simply means how much you stand to gain compared to how much you can lose, weighted by how likely the trade is to work.

A trade with:

• 6% upside and 3% downside (2:1 risk-reward)

is often better than a trade with:

• 15% upside and 12% downside (1.25:1 risk-reward)

Even though the second trade looks more exciting, it demands greater risk per unit of reward.

When deciding whether to switch, compare:

• Remaining upside on the current trade
• Remaining downside to the stop loss
• Risk-reward of the new trade

If the new trade does not clearly improve risk-adjusted return, switching is usually emotional, not logical.

Step 2: Check Invalidation Strength

A strong trade has:

• A clear stop loss
• A clean level where the idea fails
• No need for excuses or “waiting it out”

Trades with weak invalidation are dangerous because they trap capital. You stay in them not because they are good, but because you are unsure when to exit.

If the new trade has a clearer and tighter invalidation than the current one, it is often a better capital decision, even if the upside is similar.

Step 3: Time & Capital Lock-Up Test

Every capital has a time cost.

Some trades resolve quickly, move, or fail within hours or days

Others drift sideways or tie up capital for long periods

To carry out a time/capital lock-up test, ask the following:

• How long is this trade likely to take?
• Is my capital productive while I wait?
• Could this trade block better opportunities?

For capital-constrained traders, slow trades are expensive. A trade that takes weeks to deliver a small return may lose to a faster, cleaner setup, even if both are “technically valid.”

Efficiency matters as much as accuracy.

Step 4: Correlation Check

Before switching, check whether the trades are actually different.

If both trades depend on:

• The same asset
• The same market direction
• The same news or narrative

Then switching does not reduce risk. It only changes the chart you are watching.

Examples:

• BTC long → ETH long
• One altcoin → another altcoin tied to the same sector

If correlation is high, switching is just an emotional rotation and not a strategic reallocation.

True improvement comes from a better structure, not familiar exposure.

Step 5: The “Would I Open This Trade Today?” Question

This is the most honest filter you have.

Ask yourself: “If I had no open position right now, would I open this trade today at this price?”

If the answer is no, then holding the trade is emotional, not rational.

Always remember that past decisions do not justify future risk. The market only cares about what you do now.

Professional traders manage positions as if they were making the decision for the first time, every day.

If a trade no longer deserves fresh capital, it does not deserve existing capital either.

Three Scenarios Where Closing One Trade Makes Sense

Scenario 1: The Original Trade Thesis Is No Longer Valid

This is the most straightforward reason to close a trade.

Every trade is based on a thesis that may be based on statements like:

• A level should hold
• A trend should continue
• Momentum should expand
• A structure should remain intact

When those conditions break, the trade is no longer what you signed up for.

Common signs that the thesis is invalid could include:

• Key support or resistance breaks decisively
• Volume fades when expansion was expected
• Market structure shifts (higher lows turn into lower lows)
• Price behaves in a way your plan did not account for

Many traders hesitate here because the price has not yet hit their stop loss. But stop losses are risk limits, not a reason to ignore reality. If the logic behind the trade disappears, capital should move.

Closing in this scenario is not about opening another trade. It is about protecting capital and freeing it for better use.

Scenario 2: Capital Efficiency Improves Meaningfully Elsewhere

Sometimes a trade might still be okay, but another trade is clearly better.

Capital efficiency improves when a new trade offers:

• Higher risk-adjusted return
• Clearer structure and invalidation
• Faster resolution if wrong
• Stronger momentum or participation

For example:

• Your current trade has a 1.5:1 risk-reward and may take weeks
• A new setup offers a 3:1 risk-reward and should resolve within days

Even if the first trade is still valid, it may no longer be the best use of your capital.

Closing in this case is not chasing. It is a reallocation of capital.

Markets constantly change. New information appears. Better setups emerge. Professional traders adapt by moving capital to where it is most productive.

The key is that the improvement must be clear and measurable, not just exciting.

Scenario 3: Portfolio Risk Has Become Poorly Balanced

Sometimes the problem is not the individual trade, but the portfolio as a whole.

This happens when:

• Too much capital is exposed to one asset
• Multiple trades depend on the same market direction
• A single narrative dominates your positions

For example:

• Holding multiple long positions that all depend on Bitcoin strength
• Being heavily exposed to one sector of altcoins
• Stacking trades that will all lose if the same level breaks

In this case, closing one trade may reduce overall risk, even if that trade is not weak on its own.

The best thing is to think in terms of total exposure, not isolated setups.

If reallocating capital:

• Reduces correlation
• Improves diversification
• Lowers downside during market stress

Then closing a trade is a risk management decision, not a performance one.

Three Scenarios Where Closing One Trade Almost Never Makes Sense

Scenario 1: Closing Because of FOMO or Sudden Price Movement

This is the most common and most costly reason traders exit trades prematurely.

A new setup appears, and the price is already moving fast. Candles are large. Social media is loud. The move looks “clean.” You begin to feel like you are late.

So you look at your current trade, which is still valid and still within plan, and start thinking about reallocating to the new setup.

This is clearly a case of FOMO: the fear of missing out.

Fast-moving trades often offer poor entries because:

• Risk-reward is already compressed
• Stops are wider
• Emotion is driving participation

Many traders exit solid positions only to enter stretched moves that reverse or stall. The result is double damage, where a good trade is abandoned for a bad entry.

Scenario 2: Abandoning a Winning Trade Simply Because It Is “Slow”

Not all good trades move quickly.

Some trades:

• Consolidate before expansion
• Move in stages
• Test patience before payoff

Many traders misinterpret “slow” as “wrong.”

If a trade:

• Still respects structure
• Has not hit invalidation
• Continues to align with the original plan

Then closing it simply because it has not moved yet is usually a mistake.

Scenario 3: Switching to Recover Emotionally, Not Strategically

Sometimes traders want to switch not because the new trade is better, but because the current one feels uncomfortable.

Common emotional triggers include:

• Recent drawdown
• A small unrealised loss
• Boredom
• Frustration

In these moments, switching feels like a relief. A fresh chart usually gives the illusion of control. But this is emotional reset trading.

If the current trade is still valid, exiting it to “feel better” usually leads to:

• Overtrading
• Inconsistent decision-making
• Lower-quality setups

FAQs

Q1. Should I close a winning trade for a better setup?

Only if the new setup offers clearly better risk-adjusted returns and capital efficiency.

Q2. How do I avoid regret after switching trades?

Use a written framework. Regret comes from unstructured decisions.

Q3. How do professional traders reallocate capital?

They compare opportunity cost, not emotions.

Q4. Is switching trades bad risk management?

No. Emotional switching is bad. Structured reallocation is professional.

Q5. What if both trades look equally good?

Keep the one with clearer invalidation and faster resolution.

Q6. Should I ever split capital instead?

Only if both trades are uncorrelated and risk remains controlled.

Q7. How often should I review open trades?

At least once daily for swing trades, more often for intraday.

Q8. Does capital size affect switching decisions?

Yes. Smaller capital needs higher efficiency.

Q9. Is it okay to miss a trade?

Yes. Missing trades is part of disciplined trading.

Q10. What matters more: conviction or structure?

Structure. Conviction without structure is just hope.

Disclaimer: This article was written to provide guidance and understanding. It is not an exhaustive article and should not be taken as financial advice. Obiex will not be held liable for your investment decisions.