Hi Traders, today's topic regarding 'How To Get Out of a Good Trade? - Setting Your TP'. Are you still struggling to set a proper profit target? Or are you still watching some of the best trades reverse against you? It can be frustrating sometimes watching some of the best runners turn into a breakeven OR losing trade. These are some of the methods I personally use to get out of a great position (Trade Management)
1. Technical levels (S&R zones)
- This is mostly related to 'set and forget' type setup, you identify everything before hand, set your TP at key levels (broader thesis), leave it to run. But one thing when you're setting your target at key levels, you have to first understand the market condition then compare it to the current volatility. Eg. if the market is in a choppy range and you're setting your target at the all-time-high, it makes no sense (unrealistic).
- Also know that S&R are zones, so if you're setting your target at the absolute tip of the resistance, there'd be times where market just reverse against you, because mostly likely you've neglected the "zone" factor
2. Trailing Stops (Moving averages OR Prior high/ low)
• Moving Averages
This is great when you're looking for an extension sort of market movement, such as trading a flag/ exhaustion pattern. You're betting that the market will keep banging into your intended direction. How to trail it? You must first Identify the strength of the trend
- Medium OR Weak trend (deep pullback) = 50ema to trail it
- Strong trend (shallow pullback) = 18ema to trail it
• Prior high/ low
This is great when the market is in a strong trend, and your thesis is telling you that it MUST respect the higher highs & higher lows/ lower highs & lower lows sequence
- Go down to lower timeframe such as 15m, everytime when price forms a minor level, trail your stops to that structural area
- This method also helps you to keep track with the fresh momentum
If you're constantly watching the market reverse against you, there few main issues are
- You're having your target way too far (unrealistic TP), identify the daily ATR, then understand the probable and possible.
- You're looking for an extension move in a ranging condition (market isn't going to keep ripping into one direction, there will be times where it ranges, this is when you MUST have a realistic target such as setting them at previous swing high/ low)
3. Fixed RR
This is great if you're looking for a more systematic method to handle your TP & emotion at the same time
- Eg 1:3RR
- But by using this method, you'd somehow decrease your long-term expectancy as you're getting out of position way too soon sometimes
- Yes you do eliminate some effort to figure out your TP in every setup, but you'd tend to have many 're-entries' too, as the frustration of getting out of a good position too early is overwhelming too.
Feel free to comment below what's your worst nightmare in trading!
"I know where I'm getting out before I get in." - Bruce Kovner
Trade safe as usual.
Do follow my profile for daily fx forecast & educational content.
1. Technical levels (S&R zones)
- This is mostly related to 'set and forget' type setup, you identify everything before hand, set your TP at key levels (broader thesis), leave it to run. But one thing when you're setting your target at key levels, you have to first understand the market condition then compare it to the current volatility. Eg. if the market is in a choppy range and you're setting your target at the all-time-high, it makes no sense (unrealistic).
- Also know that S&R are zones, so if you're setting your target at the absolute tip of the resistance, there'd be times where market just reverse against you, because mostly likely you've neglected the "zone" factor
2. Trailing Stops (Moving averages OR Prior high/ low)
• Moving Averages
This is great when you're looking for an extension sort of market movement, such as trading a flag/ exhaustion pattern. You're betting that the market will keep banging into your intended direction. How to trail it? You must first Identify the strength of the trend
- Medium OR Weak trend (deep pullback) = 50ema to trail it
- Strong trend (shallow pullback) = 18ema to trail it
• Prior high/ low
This is great when the market is in a strong trend, and your thesis is telling you that it MUST respect the higher highs & higher lows/ lower highs & lower lows sequence
- Go down to lower timeframe such as 15m, everytime when price forms a minor level, trail your stops to that structural area
- This method also helps you to keep track with the fresh momentum
If you're constantly watching the market reverse against you, there few main issues are
- You're having your target way too far (unrealistic TP), identify the daily ATR, then understand the probable and possible.
- You're looking for an extension move in a ranging condition (market isn't going to keep ripping into one direction, there will be times where it ranges, this is when you MUST have a realistic target such as setting them at previous swing high/ low)
3. Fixed RR
This is great if you're looking for a more systematic method to handle your TP & emotion at the same time
- Eg 1:3RR
- But by using this method, you'd somehow decrease your long-term expectancy as you're getting out of position way too soon sometimes
- Yes you do eliminate some effort to figure out your TP in every setup, but you'd tend to have many 're-entries' too, as the frustration of getting out of a good position too early is overwhelming too.
Feel free to comment below what's your worst nightmare in trading!
"I know where I'm getting out before I get in." - Bruce Kovner
Trade safe as usual.
Do follow my profile for daily fx forecast & educational content.