Learn to trade discretion. I've never met a profitable system developer (self-taught or quants with Ph.Ds) who can't manually enter orders (aka. FOLLOWING RULES). The issue, is you have to be risk-tolerant. ======================================= In terms of a simple trailing stops, the key is to include, at least, volatility as a measure. Using a constant slope for trail stop has major pitfalls. A good way to think of trailing stop is to reverse the mind set as, "Would you enter/reverse a trade with this exit signal?" One newbie technique would be to test with a random entry and exit with the set of rules you have. Then test again, by tweeking the exit as a entry and use random exits.
Definitely take profit if you are trading countertrend (reversals). Either one going with the trend, depending on your timeframe.
I trade stocks intraday and I've lately been using both an exit target and a trailing stop. I'll exit my first half or 1/3 position at a specified price target, I will then move up the remaining position stop to my entry price (making it a break even trade on those last shares if I am stopped out). I then just wait for a 1 min, 3 min, and/or 5 minute lower candle close (on long trades) for the remaining exits. Theres nothing that feels worse then exiting a trade a point or two early just too take some profits. I almost never get the top doing this but my winners lately have been a lot bigger.
Based on the posts/reply... I'll drop down my advice, without being too technical/quantitative. Issue of trailing stops and taking profit is 2 different issues. In a "very simple" insight, the target is mainly a valuation standard... the issue with trailing stops are valuation plus the factor of: 1. Time. 2. Entry. 3. Analysis technique. 4. Others... depends on analysis technique/competency but as an example, flunctuation, ATR, Events. etc. So here's a few questions to ask yourself: Why would you want to take a profit? It's mainly because you think the market has over-priced itself based on whatever reasoning you place. You don't think the prices will go higher. So why would you place a trailing stop? Ask this question, then reflect it with your analysis/trading and come up with your own answer. An insight would to be consider your profit taking standard and apply that standard as a base to place your trailing stops. I can't tell you the best of both because this "largely" depends on your basis of how you trade, which I have no idea about. (Even if you tell me how you actually trade... I won't run tests to find it for you... it's part of a traders job and the learning curve... also this isn't a ATS question, just run a lot of significant tests, G*d damn it!!!)
Thanks to all for the advice. I would like to say my final word on trailing stops, and particularly sum up my concept of "take profit plus trailing stop". I have been using it on my system and it works. There is no reason to not use a trailing stop of at least one tick after a given take profit level. In my case the trailing amount is 4 ticks, and I activate it after 10 ticks of gain. The reason is that you only stand to lose 4 ticks, while you could gain thanks to it an infinite amount of profit, typically when the price is skyrocketing, which is not that rare, whereas what's rare is the system triggering the take profit exactly at the top of a rise.