I talked about how I thought the trade entry is the most important than the exit, you can read it here:
In this short article, I’m going to talk about how to exit a trade and there’s nothing complicated about exiting a trade.
Here are the 5 ways trades are exited:
#1: INITIAL STOP-LOSS HIT AND EXIT
This is pretty simple…when a trade goes against you and your stop loss is hit, you are out.
#2: PROFIT TARGET PRICE HIT AND EXIT
The next is when your take profit target level is hit and you exit the trade.
#3: TIME STOP HIT AND EXIT
There are traders that exit trades during a certain time. They have their reasons for doing that. For example, there may be traders that do not carry their trades over the weekend so which means on Friday, every trade is closed, regardless of whether they are in profit or not.
#4: TRAILING STOP HIT AND EXIT
Obviously, if you trailing stop is hit, you are out of a trade.
#5: CONDITIONS HAVE CHANGED, EXIT AT MARKET.
This is probably important than all the others…why did I say this? Well, there are many traders that enter a trade and keep holding onto a bad trade even though they can clearly see that conditions have changed and even though they could have exited quickly with a little loss or a small profit!
For example…If I buy exactly on a major support level and price goes up from there but on the next 2 candlesticks, I see price slowing down and on the 3rd candle which is like 30 pips away, I see a bearish pin bar…
What would I do? Well, this tells me that the condition as changed which I can see on the price action. So I got two options, I bail out (exit) the trade with whatever profit I have or I move my stop loss tighter, or even to break even.
What helps me most in telling me conditions have changed? Price action trading. Click that link.
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