Exit from your trading positions is an important quality a succesful traders needs to develop.-The exit is critical to being a successful trader. Let your winners run and your losers run out quickly. Two factors determine your exit, the Target and the Stop loss you have set on entering the trade.
Today was a classic example, for trades who are interacting on Facebook. We has advised on Sell on Yes Bank with traget of 343. Stock plummeted to 343 today made a low at 343, message was sent to book profit. Though only few traders would have booked profit rest would had held for more lower targets as Greed emotions must have crept it. Stock bounced back heavily and closed around 367, Many traders saw there paper profit coming down drastically.So if you want to be successful trader exit a trade is as important as entering the trade.
We have discussed few points which might help in fixing target and trailing stop loss.
1. The Target is determined by our trading system. The type of market and the trading history of the stock research is an added advantage.
2. If the trade proceeds in your direction move the Stop loss keeping it tight again as per your trading system.
3. It the trade continues to move, you may want to take your money off the table!
4. Profits should be taken before you start thinking. SO WHAT if it continues to run after you left!
5. Take Profits quickly and often! And remember discretion is the better part of valor.
6. The two most important factors in determining the Stop loss are the last Support and Resistance and providing enough margin for the trade to be successful. You must balance these against each other.
7. The Stop loss can be predetermined by your maximum loss limit but understand a small loss limit can positively impact your probability of success.
8. I must balance courage and common sense when staying in the trade. The money may be better used in another trade.
9. Remember small losses are the key to success in an environment where you may be wrong greater than 50% of the time.
10. Don’t give back, remember you can always get back in!
11. Don’t change my rules and therefore my settings.