The Dilemma of Trading Exits – I left behind Huge Profits today!

Something which is really bothering me at the moment is the dilemma of trading exits…  this has been something which I’ve been trying to work on for a long time but I can’t seem to get it right. I know that there is no right or wrong but I am currently toying around with two exit strategies and not being consistent with my approach. As a result, the dilemma of trading exits has become really frustrating and I’m afraid that if I don’t get it sorted out, my trading isn’t going to reach the next level.

So I have two trading exits currently:

  1. Take profits at next resistance level
  2. Set intial stop and trail stop up to below the low of each daily candle

If you’ve been following the blog, you would have noted that with trading exit strategy number 1 – I’ve been generally getting it right when it comes to the initial direction. However, as I am taking profits relatively early, I am missing out on potentially massive moves like today. The chart below shows the 1 hour chart of the EURJPY chart. I entered on the 5th March at 12180. I closed out at 12240 for 60 pips as it approached the resistance level of 12250. Generally I have a higher success ratio of wins to losses trading like this but pips I gain from trading like this are capped.

trading exits - eurjpy

Exit strategy two is where I let the market run for as long as I can. It is great for trending markets but it’s never really possible to know exactly when the trend starts and ends and when it starts to move between a range. I’ve been following exit strategy two since the start of 2013 and unfortunately it hasn’t been working out too well for me…  I’ve been stopped out numerous times (exit strategy two also has larger stops) and if I had used exit strategy one for those trades, I would have faired a lot better.

So todays trade, I went back to exit strategy one… I got my 60 pips but as you can see, the market shot up another 200 pips on top of my 60. Still, it is important to look at it positively so 60 pips in the bag is better than a loss.


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Category: money