Execellent topic for discussion on one of the most difficult part of trading to master. When asked to successful traders about which area they would like to improve further - majority of time thier answer is EXITs. Good to see the ideas and approach adopted by others.
My Exit approach depends on the strategy used for the trade.. for breakout/ bounce based strategy, I have two exits. They are determined by ATR. ATR gives a fairly good idea about the possible size of the next bar. Each instrument/stock has its own ATR value so I am not limited by any fixed Rs. number. I use standard 14 period ATR. My first profit target is 1*ATR where 50% of position is taken out. Rest of the position goes of at second target at 1.5 *ATR.
Once breakout is successful, then I reenter on retracement under my trend following strategy. With that strategy, my 1/3rd position is taken out at 50% of my risk amount. Another 1/3rd at 150% of risk amount and last 1/3rd is left to ride the trend with trailing stops.
This 3 exit strategy satisfy my fear - by taking profit asap, my ego - by booking profit at T2 and making position slightly in profit and my greed by letting my 1/3rd position ride as much as market allows.
Not to mention, stop order is always in place and adjust in size whenever T1/T2 is hit.
My stops at positioned at market structure level and I don't move them to intermediate point where price did not stop. Partial exit at T1, helps in reducing the trade risk without moving the stops to a random number other then mkt pivot level.
Hope it gives people idea to experiment further.
Happy Trading.
My Exit approach depends on the strategy used for the trade.. for breakout/ bounce based strategy, I have two exits. They are determined by ATR. ATR gives a fairly good idea about the possible size of the next bar. Each instrument/stock has its own ATR value so I am not limited by any fixed Rs. number. I use standard 14 period ATR. My first profit target is 1*ATR where 50% of position is taken out. Rest of the position goes of at second target at 1.5 *ATR.
Once breakout is successful, then I reenter on retracement under my trend following strategy. With that strategy, my 1/3rd position is taken out at 50% of my risk amount. Another 1/3rd at 150% of risk amount and last 1/3rd is left to ride the trend with trailing stops.
This 3 exit strategy satisfy my fear - by taking profit asap, my ego - by booking profit at T2 and making position slightly in profit and my greed by letting my 1/3rd position ride as much as market allows.
Not to mention, stop order is always in place and adjust in size whenever T1/T2 is hit.
My stops at positioned at market structure level and I don't move them to intermediate point where price did not stop. Partial exit at T1, helps in reducing the trade risk without moving the stops to a random number other then mkt pivot level.
Hope it gives people idea to experiment further.
Happy Trading.
