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.
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Very Impressive, Much new and technical things as I learned from it. Set your TP's below resistance in up trend and above support in down trend. Watch the market behaviour in 15 minutes chart, lower lows and higher high pattern. Weak trend and strong trend. As I understand, the weak trend is that trend where price is above or below 50 ema and strong trend is the trend where price is above or below 18 ema. I am also trying to know about use of ATR's strategy in trade. Regards
good one, thanks. been looking for TS integration for crypto.
iamnicerdicer
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Thank you for this Education Part.
I have tried every of those 3 strategies described. Went through all PRO's and CON's. I can say, that it is good to balance them all, depending on instrument you are trading. Adapt them all and try to make middle way.