I always have my entries and exit planned before I am in the trade. Once entered, I immediately place my take profit order. I personally use mental stops but if I didn't I would have also placed my stop order too. Either way, once it hits my stop im out. Now, in regards to it going to my profit, lets say it is 5 ticks away from my take profit limit order. Well, objectively my reward is only 5 ticks now. So, I will only risk 5 ticks for a 1:1 risk to reward. Do you get it? where you're at is where you're at. So even if I am deep in the money like 100 ticks unrealized profits, if the price is only 5 ticks away from my take profit limit order my current reward is really only 5 ticks so the only rational thing is to risk 5 ticks from that current point. The worse thing you can do is be 5 ticks away from your take profit order and then risk the current 100 or so unrealized profit ticks and let it fall back to your stop loss. That is like risking 20 to make 1. So I move my take profit stop to reflect this It's simple math and probabilities. I don't put too much focus on what the future price will do. I just play the current price and trade based on how it moves
Quite often though price never hits your target so you have to manually exit before a winner turns into a loser. For example I went short SPY (thru options) last week at 295 and had a target of 290. But it hit like 290.07. I got out at 290.5. The lonely alert on 290 is still there, but it never hit. Without manually managing the trade, I would have left a lot of money on the table.
Yes, that's true I should do that. Note down when I get out and when I don't and how much profits/losses am I making by getting out and not getting out. But I can already tell its better to get out hehe
Yes true, I guess that works better also when you are trading larger as taking 50% profits is still a decent profit
I see what you mean. I think another thing we can do that came on my mind yesterday is to do reverse psychology. A lot of times we say I don't want to take profits as I can miss out on gains but in our minds we know the trade is not good anymore and we should get out. Instead of saying to ourselves there is a possibility that the trade can be good and keep going our way, we should say in our mind that the trade is not good anymore and that I should take profits otherwise I miss out on making money, buying nice things and looking dumb. I think once we turn the idea in our head that the trade has no more potential to be good anymore and it is a bad one, it forces us to get out since if we consider it bad, we don;t want it anymore
Ok I see thanks. you are right. Also what I mentioned as a reply to"tomorton" can help too. I will try it and see how it turns out
Hello 3acor, Yes, you asked a good question. I face the same challenge. It all relates around repeatable trade managment strucutre of each trade. So lets discuss challenege, solutions, disadvangte, and advantage, testing. I combat it with how I want to trade. It is a personal thing. Some people trail stop a winner until profit target is reached, some people do not use profit targets, and just trail stop the winner. Challenege: 1. Do I wait for my pre defined profit target to close trade? 2. Or do I exit when I feel like stock price will not reach my profit target? Solutions: Option 1: Wait for your profit target to hit. Option 2: As stock price moves towards your profit target, adjust your stop loss to lock in profits. Advanagtes: Options 1: less stress, less worry, set and forget it, free your time. No need to watch the chart repeatedly, go back to full time job, etc. Options 2: You lock in profits as price reaches your target. Disadvanagtes: Options 1:stock price can come within $0.01 (1 cent) of your profit target and reverse on you. You take a loss instead of a win. Now you are pissed off for days. Your profit targets better be right. Options 2: There will be times when you don't get all your profits. Testing: 1. For 50-100 trades try both option 1 and 2. Research 3 ways you want to use trail stops (price action methods, dollar value method, indicator method) During testing phase your will discover the challenges of options 1 and 2. My conlcusion (fyi, i make no money trading, still trader in the trenches on my journey to sucess) is: Do what you have time to do. Do what you comfortable with doing. Do what testing results tell you to do. I am in the same position as you. I have no choice but to test each options. However, I personally like the trailing stop method. The problem with that is finding one trailing stop method and sticking with it.
Heh, talk about a bipolar company... https://www.marketwatch.com/article...uction-to-china-51561749866?mod=mw_latestnews