When to Close a Profitable Trade
I am still finding it difficult to take full advantage of my winning trades.. I recently did some digging into some of my previous winning trades to see how I can improve on their exits. Quite often, I find that I have closed too early my trades for a profit.. but a profit which isn’t as good as it should have been.
Of course, there are times when I close a trade at the optimal point and it is exhilarating when you do this.. you feel great that you’ve been able to get out at the best point for the day. However, there are more times when I realise that I should have kept in the trade and rode the move.
There are many different ways that people exit trades and it’s not always possible to maximise the gains per trade. Methods that I use are currently:
1. Target a 1:1 risk reward… ie I work out the stop and ensure that my limit is exactly the same amount in pips or points.
2. Target a 1:2 risk reward – personally, I find this difficult to do…
3. Close a winning trade as soon as I see it hit resistance if I’m long or support if I’m short – most of the time I do this, it’s premature! Sometimes these coincide with round numbers. I find that I’m then mixing up my timeframes.
I’m sure there are others which I may have done in the past also.. too numerous to list 🙂
Anyway, something that I’ve not yet tried but looks like it works great in trending markets particularly as I take my trades off Daily charts is moving the stop to the lowest price of the previous day! I know this is simple but if I had done this in my trades, there are some huge gains to be had! Yes, it is frustrating if you have given up gains but I can see that in trending markets, this could be very profitable and suits my type of trading. The hard thing now is follow this…
I currently have EURUSD and EURJPY open long trades so it would be good to see if I can keep to the plan with these two. I feel accountable now as I’ve posted this… 🙂
