What button can I click if I DON'T want to "Like" the post but I DO want to "Like" the music? You're not playing fair.
First of all, no one in this world will know how far the price will go. Only God & those with Crystal ball will know. Let's say you are day trading with 2 lots. for first lot, target reward / risk ratio of say 3 : 1. for second lot, target RR ratio > 3:1 by holding it for many many hours. make sure you have protective stop in place.
There's a simple method, you can't lose money by taking profits. When a trade is profitable and you have reached resistance, set your trailing stop loss or sell using limit price. If it runs up, so what, you've left something for the other guy, hindsight is 20/20. No need to beat yourself up because you didn't sell at the top. Once you're out of the underlying, and you still think there's more, sell otm put. Bulls make money, Bears make money. Pigs get slaughtered.
Correction to post #10: After all, you didn't regret not entering that trade at the very bottom, did you?
Great to see a thread started on exits, far more important and interesting and challenging than entries. I'm overwhelmed by the compulsion to bang my same old drums - 1. plan to not have to exit, so only enter trades with the trend 2. don't exit at a profit target, add another trade when £ reward gets to £ risk and move first trade's stop to entry 3. keep repeating No.2 4. a stop-out in a trend is an opportunity won 5. ignore resistance in an uptrend, ignore support in a downtrend
Ah!, someone who shares my opinion! Maybe you could expand on this point as I tried to do last year in the following post. Maybe you can do a better job than I did as nobody seemed to pay attention to what I(we) believe is valuable. https://www.elitetrader.com/et/thre...s-not-so-obvious.151802/page-614#post-4494176
Yep, Used to trade with a woman named Victoria Pearson (was an associate of Raschke) who used to say "support/resistance is meant to be broken." A trend by definition will break prior S/R levels or it wouldn't BE a trend.
I didn't see it at the time but your point is good - that we should treat resistances in an uptrend as being weaker than supports, and supports in a downtrend as being weaker than resistances. If they were of equivalent power and effect, there wouldn't be half the trends of half the length that we do actually see. Opposites are not always equal. That's how trends tend to continue more frequently than they tend to reverse. And its why patterns such as ranges, which are not trends, also tend to continue. The difference is that a trend has no inherent and structural limit to its travel, while a range does (as do other chart patterns). So why would a trader select a pattern which has a probable termination after say 200pts, against a trend which doesn't have a probable termination after 200pts?
If you're going to try that, specifically, I'd strongly advise you to trail it manually, perhaps just above/below the most recently-formed swing-high/low, rather than using an automated trailing stop which is just a fixed number of pips/ticks/points. And in general, it may be wise not to assume at too early a stage of your thinking that the fact that something offers the convenience of being an "absolute rule" also makes it the best (or even necessarily an appropriate) solution.