Trade Exit Rules
Each trader has to focus on the exit plan and at the same time on the exit rules in order to be profitable. Both entry and exit rules can be thought of in terms of how strict they are, specifically how easy or difficult they are to attain.
Numerous traders have a set of strategies and tactics alongside with rules, that they stick by, when they are entering or exiting trades, but even the most experienced have difficulty in carefully selecting when to exit a trade. Exiting a trade is just as important than exiting it, especially if you are in it for the long run.
Timing of when you enter and exit a trade is crucial in making you trading strategy overall profitable.
You don’t make or lose money until you exit a trade, as a result having a accurate, measured exit method is crucial to generate predictable returns. Each exit rule for your trading system should be in harmony with your trading system objectives. Every exit type rule exists to attain a specific goal for a trade and not every type of exit is applicable to every trading system.
Here are some simple, yet very effective strategies for an effective entry-exit trading strategy:
- Exit when your profit objective is reached
- Intra-trade drawdown trade exit timing
- Exiting a trade if you see any un-expected movements
- An exit rule in case of U-turn right after entering
- Quick trade exit strategy
- Exiting when the market is moving against all odds
- Price moves towards your profit than moves
- Chart pattern exit rule
- Emotional exit strategy
Trading with the complete currency trader is a lively organism and you cannot predict everything that is going to happen. Constantly be on the look-out and make the right decision following these entry and exit rules. Most of the time you should just sit and wait, but there will be situations when you will need to react quick and very strategical. At these breaking points is when the exit and entry strategy comes into play, because you will need to react quick! You will need to wait for the right movement and than make a rational decision.
When your profit objective is hit by your trade then you have some options like:
- Continue in the trade without making any change
- To wait for a U-turn signal
- let the rest run and take off some of the position
- Let the position run as well as tighten the stop loss
- Make sure you have a profit threshold for when to exit an trade