<h2>Foregone Earnings: A Beginner's Guide</h2>

<p>Foregone earnings, also known as <strong>unrealized profits</strong>, are earnings that a trader has the opportunity to make but chooses not to. This typically occurs when a trader has an open position in the market but does not close it to secure the profits. Instead, they keep the position open, hoping that the market will move further in their favor.</p>

<h2>How It Works</h2>

<p>Foregone earnings can occur in various scenarios. Here are a couple of common ones:</p>

<ul>
  <li><strong>Holding onto winning trades:</strong> A trader opens a position and the market moves in their favor. Instead of closing the trade to secure the profits, the trader holds onto the position, hoping the market will continue to move in their favor. If the market reverses, the trader may end up giving back some or all of their profits.</li>
  <li><strong>Not closing losing trades:</strong> A trader opens a position and the market moves against them. Rather than closing the trade to limit their losses, the trader holds onto the position, hoping the market will reverse. If the market continues to move against them, their losses can mount up.</li>
</ul>

<p>In both scenarios, the trader is forgoing the opportunity to secure their earnings or limit their losses. Instead, they are gambling on the market moving in their favor.</p>

<h2>Why It Matters for Traders</h2>

<p>Foregone earnings can have significant implications for traders:</p>

<ul>
  <li><strong>Risk management:</strong> By not closing trades, traders are exposing themselves to additional risk. A small market movement could wipe out their profits or increase their losses.</li>
  <li><strong>Opportunity cost:</strong> By not closing trades, traders are missing out on other trading opportunities. They could be using their capital to open new trades that have a higher risk-reward ratio.</li>
  <li><strong>Emotional trading:</strong> Foregone earnings often stem from emotional trading. Traders may be too greedy to close winning trades or too hopeful to close losing ones. This can lead to poor decision-making and increased risk.</li>
</ul>

<h2>Example</h2>

<p>Let's say a trader opens a long position on EUR/USD on the STB Provider's MetaTrader 5 platform with a leverage of 1:300. The market moves in their favor, and their trade is now showing a $500 profit. Instead of closing the trade, the trader decides to hold onto it, hoping the market will move further in their favor. However, the market reverses, and the trader's trade is now showing a $300 loss. The trader finally closes the trade, forgoing the opportunity to secure their $500 profit and instead realizing a $300 loss.</p>

<h2>Key Takeaways</h2>

<ul>
  <li>Foregone earnings are earnings that a trader has the opportunity to make but chooses not to.</li>
  <li>Foregone earnings can occur when traders hold onto winning trades or do not close losing trades.</li>
  <li>Foregone earnings can have significant implications for traders, including increased risk, opportunity cost, and emotional trading.</li>
  <li>Traders should have a clear exit strategy for their trades to manage their risk and secure their profits.</li>
</ul>