I've seen many people say you should have your exit strategy planned before you ever make the trade. When you are at the tail end of a trade where your pre set exit is in sight and the candle is going long and looks like it has no plans on stopping, or the moving average is trending sharp and vertical, is there ever a time where it is okay to deviate? I suppose one might argue deviating here or there, even if it works out is -ev over the long haul and reinforces bad behavior, but I'm curious if people implement certain grey areas for the aforementioned scenarios? I've also seen it said "Be patient with your winners" which makes me curious if people move the goal post when they see certain conditions setting off bells. Thank you in advance.
Within the theme of "trying to let your profits run"... you should be looking to sell either when (1) your play may no longer be working for you.. a "defensive" stop, or (2) you try to make an aggressive close out into what you think/hope will be a reversal point. You really shouldn't have pre-planned targets... unless they coincide with #2 above. IOW... try to let the market tell you when to buy/sell rather than deciding (arbitrarily?) in advance.
Price can only do a certain number of things so it really ought to be possible to plan for all. Once you're in a long position, you believe it is probable price will go up but possible price will go down. So, price can - go higher than expected go up less than expected go lower, as anticipated go lower than anticipated (in which case your stop is hit and the trade closed) If you like, at every point, the position needs a dynamic probability analysis - is price more likely to rise from where it is or to fall from where it is? Once this reaches 50-50, you might as well exit anyway.
I learned long ago to employ what I call the gold star method. First, you get 2 gold stars... one for proper analysis and one for acting on that analysis. That is your threshold to match or beat... you need a minimum of 2 valid reasons to remain in the trade (greed is not a valid reason) . Questions that help... answers should begin to stream(or not) within seconds of asking. Q1: "What reasons exist right now to remain in the trade?. Answers that begin with "because I think blah blah blah" , or "it's OK if blah blah blah", are invalid, have no place, and are dismissed. Q2: If I enter here, what is the trade plan? This is important... you have 2 "directions" at this question... answer based within your area of knowledge, -or- answer based on unfamiliarity: The first builds experience, the later is is called growth, using the casinos money to try/test the unfamiliar. In all cases... If you do not have at least 2 valid reasons to remain in the trade, 100% of the time is.... NEXT!! And you get another gold star for sticking to the plan. HTH
It couldn't be simpler - does the chart say price is more likely to go up than down? Yes? - hold. No? - sell. Don't know? - sell.
I've always found it best to let the trade do what it will while adhering to the rules of my trade plan. I am a day trader so swings might provoke some intra-trade analysis.
Plan your trade, then trade your plan. If, over the past 15 years, I had let every trade run to the planned exit, my accounts would be far, far greater than they are now. One of the worst habits you can get into is nailing an entry based on a good setup, then trying to manage an exit based on your immediate feelings/emotions/opinions. It's a hard habit to break, but absolutely necessary if you're going to stay in the game.
Very true,I'm in the same boat...if I had let every trade run the account would be much larger. But unfortunately the obsession with win rate cuts off some big winners. Because some of the decent size winners would have turned into stop outs without trailing a stop after x gain.