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Once upon a time, I used to worry about losing trades. Presently, I worry about winning trades. Exiting them is very tricky. I am aware that it is a phase every trend follower goes through. Any trend followers here who can help me?
Can you help answer these questions from other members on NexusFi?
If you are a manual trader then the most common way is something like this:
1. Set your initial profit target X ticks away from your entry: (This is usually more than just a scalp, and often unobtainable because of how far it is set). But the idea is to set a decent profit target for your self in a best case scenario.
2. Once you move into positive territory of Y, then you move your stop loss up to a break even.
3. Once you move into a further positive territory, then you move your break even into a small profit
4. Repeat step 3 each time to gain X amount of additional ticks.
At some point you will either hit your original profit target, or slide backwards and hit your stop which is now profitable. So it is a win win.
In the analytical world there is no such thing as art, there is only the science you know and the science you don't know. Characterizing the science you don't know as "art" is a fools game.
I use a predetermined area for my TP. Its usually a 1 to 1 completion of the swing price is correcting off of. In my pic, the main swing I am referencing is the AB leg. My TP would be at the end of the CD leg, an equal distance move. If you are having a hard time taking profit, have a predetermined area you will look to close the trade and book profits. Also, something I have been looking into lately, is that most of the times, the trend will have about 3 minor corrections before making a bigger correction correlating to the main swing. This isn't all the time because I have seen more than 3 minor corrections, but it does happen quite frequently. I have them numbered on the chart as well.
I know people don't like to leave money on the table by exiting early, but in the grand scheme, you hit your goal by having price reach your predetermined area and you are making money, even if price continues higher. Just my two cents.
Unfortunately, I am a manual trader trading using Donchian channel. The fact that I don't have programming skills or I don't know anyone who can help me automate makes me feel bad. Anyway, I have applied this advice but I am not yet comfortable with taking profits at predetermined targets. I guess I just want to let profits run or I am simply fearful of leaving money on the table, sigh. I'm thinking If I get a 1:1 (1R) move, I cut my position into half, taking partial profits and move my stop to breakeven then a 2R, I start trailing using a 5 period Donchian on the 4 hr TF.
@Mwenga using the donchain mid-line is my preferred method for trailing my runners. I use 2 targets (50% of position at target 1, at least 25% of position at target 2) plus a runner. For this runner I will normally trail the donchain mid-line by about 5 ticks (tighter on index futures and wider on commodities).
These positions are intended to be a once a day trade though so my donchain period is between 60-100 (on ~600 tick charts) depending on which instrument I'm trading. If I have to step away from the computer much earlier in the session and want to give the runner even more room then I will trail and attach the order to the RTH VWAP.
It became much easier for me to let runners go once I got used to scaling in and out of positions. Just my approach, but hope it helps.
