How do people take profits?

[Jason101]

Forgot to answer, yes red lines are stop moves.

No staddle, I just do not think it is healthy to predict moves once in but to just un-thinkingly follow the price without a care as to where it goes.

Got to go and tile now.

 

[munchiedude]

sure, interesting strategy. erm, i'll let you back to tiling your bathroom, im gonna go walk the dog

 

[eegozi]

thanks eegozi for your input. as per the original post, does your method enable you to maximise profits and give guidance for exiting if the market moves sharply in your favour?

Yes...As I stated use your shortest time frame you follow and use the 13,39 EMA cross if it is a standard move with th etrend about 30-45 degree angle upward. As the move is sharper and angle increases to say 60 degrees (move sharply in your favour) then change to the 5,13 EMA stop. You should be able to guess what price each day will trigger a EMA cross by subtracting the price from the EMA you use as the signal (in this case usually EMA 39). As the stock retraces closer to the EMA 39 you tighten your stop more . This allows there to be some dips below the EMA 39 without triggering a cross and stopping you out prematurely. There are also calculations you can use for a EMA that you can plug into an Excel file to give you an exact number but I find that just eyeballing it does a better job. Each day or hour or whatever I move my stop up higher and higher but always a distance below the EMA 39.

I urge you to look at your recent trade that you think you missed out on some $$ and see if this would have helped. I am confident it would have been better than what you did. However, nothing is perfect of course.

 

[eegozi]

I find the best answer in these times is fast

I've had so many positions go from profit and then i'd try run it and off it goes into a loss. I don't know what your style of trading is, but it's best to take an achievable profit. Get out, wait and then go again. If the market's trending it's a different matter, but in these highly volatile times I really don't want to be hanging around in trades trying to squeeze out a few extra pips.

See,...that's why I think my EMA 13,39 cross works really well. The MORE volatile a market the shorter the time frame you use. If you want use 5 min or 1 min time frames. You will always be on the right side of the trade assuming that you have an appropriate setup. It will also keep you out of bad trades. Lets say you have a setup you like to use but the SHORTEST time frame you follow shows that the price is is below the EMA 13 and the EMA 13 is below the EMA 39,...then you DO NOT take the trade until,..if and when these are all aligned correctly. Now you have your setup and your moving averages at least for a short while all telling you to GO. If that changes you can either thin your position or get out all together. It works,....go back and examine your trades I bet you will see it is helpful. At the very least you could modify my approach to your liking but the concept is pretty simple.

 

[eegozi]

classic example happening now on eurusd! where to take profit?

You should have taken profit when the move turned parabolic and shot almost straight up and the shorter EMA crossed below the next highest EMA...I estimate at around 1.4440.

 

[munchiedude]

You should have taken profit when the move turned parabolic and shot almost straight up and the shorter EMA crossed below the next highest EMA...I estimate at around 1.4440.

hi eegozi, im trading trendline breaks and a trendline break was forming around the upward red line so my entry was 1.4441 going short with s/l at swing high. i rode the move downwards. hope that clarifies. as i wouldnt be taken profit at 1.4440 since i never got in at swing high, only at the trendline break.

sorry for the noob question but what do you mean by move becoming paraobolic? and how do you draw that red circle using mt4? or did u not do it with mt4?

 

[munchiedude]

sorry, didnt see the post on the previous page also. thanks for explaining your methodology, i think the science behind it is solid and much less guesswork than my current method so many thanks for sharing as im sure those who read this may find it also useful if they are having a similar issue as me.

i will go back to analyse my trades at the weekend and apply your methodology and see how it compares in terms of identifying profit take lvls and update back once i have an answer.

cheers

 

[eegozi]

hi eegozi, im trading trendline breaks and a trendline break was forming around the upward red line so my entry was 1.4441 going short with s/l at swing high. i rode the move downwards. hope that clarifies. as i wouldnt be taken profit at 1.4440 since i never got in at swing high, only at the trendline break.

sorry for the noob question but what do you mean by move becoming paraobolic? and how do you draw that red circle using mt4? or did u not do it with mt4?

Parabolic means the move is sharply heading higher or lower,...almost straight up or down. I define it as at least a 60-65 degree incline to the trend and EMAs. I draw the red circle in MS Paint. I would say you had either a bad entry or a bad trade that just moved against you. Try buying at support where a trend is already in place. Most breakouts FAIL...and are commonly head fakes by the pros looking to take your money. The EMA's clearly said NOT to get in in my humble opinion.as they were curling down and about to cross. You should wait and see if it bounces off support and the shorter EMA curls upward and get in then. Thats what i would have done.

 

[munchiedude]

Parabolic means the move is sharply heading higher or lower,...almost straight up or down. I define it as at least a 60-65 degree incline to the trend and EMAs. I draw the red circle in MS Paint. I would say you had either a bad entry or a bad trade that just moved against you. Try buying at support where a trend is already in place. Most breakouts FAIL...and are commonly head fakes by the pros looking to take your money. The EMA's clearly said NOT to get in in my humble opinion.as they were curling down and about to cross. You should wait and see if it bounces off support and the shorter EMA curls upward and get in then. Thats what i would have done.

with that particular trade in mind, i made a profit of 16.5pips so from a monetary perspective, it wasnt a bad trade, the breakout strategy that i trade involves shorting (in this case) after a short bar that clears the trendline completes on a 5 min chart. yes, that might be a lower entry, but forsaking some profit for that confirmation i am finding so far tends to avoid the fakeys altho i have to appreciate that i would need more trades of this type to confirm whether it is an edge or not.

i havent used the EMA as ytou have suggested but will analyse and look to implement it as it seems a much more advanced way to know when to take pips off the table!

 

[munchiedude]

another classic example on eurusd making a immense move to the downside....i sold at 1.4412 for a profit of 12pips (got stopped due to cancel and replace) and the mkt goes on down for another 40 pips...left a lot on the table with this one.

 

[hydrafrac]

You could choose to adopt a mechanical method of taking profits, but the downside of such a path is you would deprive yourself of the benefits of good judgement applied to the market environment in which you are trading. You might observe how this guy manages his positions and exits, though he is sometimes hard to follow:

 

[eegozi]

hi eegozi, im trading trendline breaks and a trendline break was forming around the upward red line so my entry was 1.4441 going short with s/l at swing high. i rode the move downwards. hope that clarifies. as i wouldnt be taken profit at 1.4440 since i never got in at swing high, only at the trendline break.

sorry for the noob question but what do you mean by move becoming paraobolic? and how do you draw that red circle using mt4? or did u not do it with mt4?

I just looked at the image again and the stop would have been more around 1.44525 not 1.4440. I dont trade currencies so i guess those few pips to me dont seem like alot but i know they are for you guys. That would have made it better in my opinion.

 

[Pipsaholic]

I am of the opinion using a 2 point exit strategy taking the bulk of the position 70-80% off and letting the other 20-30% run to next S&R or pivot point level.

If you lose the 20-30% move your losses will not exceed your gains. Also, the more profits you make the more stricter your rules should become to preserve captial.

 

[munchiedude]

I am of the opinion using a 2 point exit strategy taking the bulk of the position 70-80% off and letting the other 20-30% run to next S&R or pivot point level.

If you lose the 20-30% move your losses will not exceed your gains. Also, the more profits you make the more stricter your rules should become to preserve captial.

i would entirely agree with your point, pipsaholic,

currently trading a single 0.1 lot with very small amounts to get some live experience. whilst my current balance supports 2 lots, certainly would be looking to gain more experience in getting the exit optimal as possible and then implement the 2 point and possibly 3 point exit as i totally see value in its implementation.

 

[gdr3k]

hi dany123, apologies but i've read your post twice and cannot understand its meaning or relevance to the thread? pls elaborate, but thanks for posting!

hi tomorton,

thanks for your reply. whilst i appreciate the scalability of lots, i.e.£1/pt, £100/pt etc, i would say that monetary profit is not as important as scoring pips at this stage of my learning and also for future trading.


the reasoning behind it is this: lets say i end up being a consistently profitable trader, i would rather consistently score 30-100pips/day than to consistently score 5-10pips/day as i believe it would then factor in the market fluctuations and even things out. the £/pip value is irrelevant. i could do this with any value if i am consistently profitable.

the question is, if i wanted to make £500/day, would i rather do it by looking for 5pips at £100/pip or 50 pips at £10/pip? i would choose the later as i can make more trades and work on the longer term law of averages rather than make 1/2 trades and then be done for the day. i personally believe that not every trade will be a winner and thus allowing more trades to carve out an edge is better?

this is an open topic and some may disagree with the logic, i would welcome and argument for an against it but its just my line of thinking and it may/may not be correct, but i deem it sensible.

feel free to comment

Depends how the day is looking on the side of volatility, what news releases are that day (I never trade 30 minutes before and an hour after any big releases), and if someone is due to speak about a certain countrys economy, I stay well out.

I don't always trade the same lot size however a normal trade works out to around £6 p/p, another thing aswell it is impossible to say 'right i'm going to make x amount today' because you can only trade what the market throws at you, then you have to turn that into a profitable trade by seeing where it is likely to go from there, as nothing is certain. I try and aim for no more than 3 or 4 trades a day, however I'm happy with doing just one, some days I don't do any due to reasons stated above.

What indicators, if any, do you use to give you a buy or sell signal?

 

[munchiedude]

Depends how the day is looking on the side of volatility, what news releases are that day (I never trade 30 minutes before and an hour after any big releases), and if someone is due to speak about a certain countrys economy, I stay well out.

I don't always trade the same lot size however a normal trade works out to around £6 p/p, another thing aswell it is impossible to say 'right i'm going to make x amount today' because you can only trade what the market throws at you, then you have to turn that into a profitable trade by seeing where it is likely to go from there, as nothing is certain. I try and aim for no more than 3 or 4 trades a day, however I'm happy with doing just one, some days I don't do any due to reasons stated above.

What indicators, if any, do you use to give you a buy or sell signal?

hi gdr3k,

thanks for sharing your thoughts on the issue. as im a newbie my strategy is somewhat still in development. initially i was only trading macd/stox crossover and wasnt going too well. this has subsequently developed into trading trend breaklines with the stox and macd used only as guidance.

with the limited amounts of trades ive done, this approach has shown some success and my account has reversed with longer winners and smaller losses but i do still believe that this can be improved further as its still early days.

i am now of the opinion that i would probably not use indicators for buy/sell signals but merely as confirmation tools after price action correlates to my entry/exit points.

 

[Bint_Crusher]

Munchie, have you stops set and targets defined before you enter the trade. Scale out as you hit your target, get a free trade then leave 1 lot to run. There may be times when the market goes against you from the outset, so have a well defined rule as to when you are going to chop it off. (The trade, not yer *****). One of my rules for intraday is that the next 6 min bar must be in the money or I am out and look for the next entry. This is a very mechanical way to trade but with a 3:1 reward to risk ratio then I can Fork up the entry over 50% of the time and still make money.

 

[munchiedude]

Munchie, have you stops set and targets defined before you enter the trade. Scale out as you hit your target, get a free trade then leave 1 lot to run. There may be times when the market goes against you from the outset, so have a well defined rule as to when you are going to chop it off. (The trade, not yer *****). One of my rules for intraday is that the next 6 min bar must be in the money or I am out and look for the next entry. This is a very mechanical way to trade but with a 3:1 reward to risk ratio then I can Fork up the entry over 50% of the time and still make money.

hi bint, thanks for your advice. what TF's do you trade? im trading mainly off a M5 atm with M15, M30 and M1 to complement so some would say very short term here.

wrt identifying targets, its something im working on. before the trade i always define the s/l as a 2 pips above the last swing high/low and only enter the trade if distance between the swing high to current price is within my risk management criteria of 12 pips. if its not, then i dont enter the trade.

wrt to exits, what i do here is manage the trade and as it develops, 3 scenarios form:

1) it goes in my direction and trade still valid
2) it goes against and i get stopped out
3) it goes into consolidation.

with scenario 1, i expect to implement cancel and replace s/l sensibly until i get stopped out.
with scenario 2, i lose.
with scenario 3, i cancel and replace stop to top of the consolidation's range(if going short) or even manually close if in b/e or better situation. simply because the if trendline breaks and moves into consolidation rather than trend downwards, the original break didnt develop the way i expect therefore im looking for an exit.

so the answer to your question i suppose is that i have a s/l before the trade, i ascertain an entry but i do not have a target price as i use a cancel and replace to lock in profit as the trend develops. maybe i should have a target price, i.e. at a strong sup lvl, but i havent defined it as such.

the issue of scaling out is a very sensible one and im definitely looking to implement it, however my account is the tiniest of tiny accounts and the impact of trading 2-3 lots to scale back later would push my MM into too high a %age atm.

the idea is as i learn more and the strategy develops and mistakes show up during post trade analysis, that i can hone it further and further and then put some serious money on the line that allows me the flexibility to trade multi lots

i like your 6 mins in profit rule, its sensible and i need to define my own rules and put it down on paper, i did have a trading plan but things have moved on from that wit experience!

 

[barjon]

I am of the opinion using a 2 point exit strategy taking the bulk of the position 70-80% off and letting the other 20-30% run to next S&R or pivot point level.

If you lose the 20-30% move your losses will not exceed your gains. Also, the more profits you make the more stricter your rules should become to preserve captial.

Van Tharp would have it:

"It is superficially attractive to have entered a full position and scale out at various levels to “lock in” profit at various stages, but what you are doing is ensuring that your losses will be large (full position) and leaving yourself with your minimal position when you make your largest gains."

He goes on to say than when he has asked clients to review their "scaled out" trades and imagine that they only took either a full loss or a full profit they were amazed at how much more they would have made holding on to a full position.

Just an alternative perspective

jon

 

[Bint_Crusher]

hi bint, thanks for your advice. what TF's do you trade? im trading mainly off a M5 atm with M15, M30 and M1 to complement so some would say very short term here.

wrt identifying targets, its something im working on. before the trade i always define the s/l as a 2 pips above the last swing high/low and only enter the trade if distance between the swing high to current price is within my risk management criteria of 12 pips. if its not, then i dont enter the trade.

wrt to exits, what i do here is manage the trade and as it develops, 3 scenarios form:

1) it goes in my direction and trade still valid
2) it goes against and i get stopped out
3) it goes into consolidation.

with scenario 1, i expect to implement cancel and replace s/l sensibly until i get stopped out.
with scenario 2, i lose.
with scenario 3, i cancel and replace stop to top of the consolidation's range(if going short) or even manually close if in b/e or better situation. simply because the if trendline breaks and moves into consolidation rather than trend downwards, the original break didnt develop the way i expect therefore im looking for an exit.

so the answer to your question i suppose is that i have a s/l before the trade, i ascertain an entry but i do not have a target price as i use a cancel and replace to lock in profit as the trend develops. maybe i should have a target price, i.e. at a strong sup lvl, but i havent defined it as such.

the issue of scaling out is a very sensible one and im definitely looking to implement it, however my account is the tiniest of tiny accounts and the impact of trading 2-3 lots to scale back later would push my MM into too high a %age atm.

the idea is as i learn more and the strategy develops and mistakes show up during post trade analysis, that i can hone it further and further and then put some serious money on the line that allows me the flexibility to trade multi lots

i like your 6 mins in profit rule, its sensible and i need to define my own rules and put it down on paper, i did have a trading plan but things have moved on from that wit experience!

RE WRITE YOUR PLAN AND FOLLOW THE FORKER. My 6 min rule was developed over a few months of day trading when I noticed that on the rare occasions I had my entry strategy spot on then the spread was taken up inside the first 5 min Bar. So to give me that little bit more legroom I added a 1 min bar and follow that rule. This way the losses are minute as effectively I have not been stopped out and all this is recorded in my Live to Trade Another Day Folder. Sbsequent trade management is dependent upon Supply and Demand areas, after I have a free trade then I like to let the trade run for as long as I can, moving the stop as I see fit.