Exit strategy
Just as I need entry rules and a precise method for entering a trade I also need exit rules and a precise method for closing a trade with maximum profit.
Apart from finding a method that actually works perhaps the hardest thing is to allow a profitable trade to run its full course! The moment a trade goes into profit fear raises its ugly head, I don’t want to lose that profit however small so at the first sign of a natural retrace temptation is to hit the exit button and the trade ends with scalping a few measly points or worse exiting a perfectly good trade at break even before it gets going. In doing this I’m guaranteed to miss out on the long profitable trends so I never close a trade at break even!
‘Never let a winning trade turn into a loser’ and ‘you’ll never go broke taking a profit’. These are the sayings that plant fear in minds and to trade we need to be free of fear. To trade we need to follow our method to the letter and that includes following the exit strategy. We know there will be losing trades but we also know this method works, I’ve shown plenty of examples to prove it and there are plenty more to come you bet!
Exit rules
Closing the long trade.
When a price trends be it up or down it trends in waves and this method I use is designed to surf that wave and is designed to stay with the trend. This means allowing the price room to move.
Let’s assume the trade is entered and we have bought the market. The first stop is the maximum stop loss 30 pips or below the channel whichever is the lesser. The price rises then falls back and rises again forming a higher low. If our stop loss is still intact the stop (a manual not an auto stop, as we always watch the price) is then raised at a level 2 pips below the higher low.
In our uptrend the price will often bounced off the blue 15 ema line confirming it as a support line. The manual stop will be raise every time the price forms a new higher low and fixed 2 pips below the low. However high the price might rise and move away from the blue 15 ema line and the main channel sooner or later it will return back to the channel no matter what.
Sounds a little complicated so again the charts will simplify things and there are plenty of examples to show. The following charts show valid trades from start to close conforming to the exact entry and exit rules as described above.
