Knowing When to Exit a Winning Trade
I'm not immune, by any means, to ALL those EMOTIONS you go thru when you are in a Winning Trade, but I can tell you with great certainty that ……
You dont want to get “CAUGHT LIKE A DEER IN HEADLIGHTS” otherwise you stand a good chance of turning that Winning Trade into a breakeven or even losing trade.
Does the following scenario ever happen to YOU?
Your trade setups, just as you had anticipated, and from the very onset of the Trade, prices start moving in your direction…..
Prices start moving toward your target zone….and finally approaches the mental target that you had set just below a Key Resistance Level…..
But you can see the MOMENTUM increasing as it approaches the
Resistance and BANG…...It breaks out of the Level with 2-3 Strong Candles…..
As you are watching this closely, you decide to mentally trail a STOP LOSS using a 14 period SMA or whatever……
Ok prices continue to PUSH HIGHER with NO END in Sight…...
And with No Major Resistance Level Overhead…..You decide to MILK this one for a Big Winner…..
Now in a Nice Healthy Profit on this Trade….getting ever so excited….You mind starts to wander….
In the back of your mind….you’re thinking about how you are going to take some of the profits from this BIG WIN, and buy a nice gift for your wife, and finally get out of the DOGHOUSE for whatever it is that you did that pissed her off last week….
While these thoughts are marinating in your brain...you notice prices pulling back a bit…..Oh just a minor retracement….NO Biggie….
It should bounce back of this 23% Fib retracement and continue….
But for some ODD reason its breaking thru the 23% Fib Retracement…
Ok likely a deeper retrace than I thought….
No Pain...No Gain….Let’s see what happens at the 50%....
Its gotta hold that level, the Momentum is weak to the downside…
It’s just some profit taking….That’s ALL…You tell Yourself...
By this time prices have gotten close to your entry point, and YOU can’t believe WHAT THE HELL IS HAPPENING…
It not SUPPOSED to do that…..IT Doesn't Make Sense….
Alright…So you come up with a BRILLIANT Idea on the FLY…
You Just Know that Prices Have to Go Up from Here….
So you Enter a Limit Order to Buy 2 more Lots at your original Entry Price, and Promise YourSelf, that the next time it gets to that earlier Swing High, you’re just going to Exit…..No IF, ANDS or BUTS
But NOW with twice the Profit…So you convince Yourself...
You get Filled on 2 additional lots, but There’s just One Problem…..
Price Starts spiraling down, as if it had no REGARD for your position…...At this point you are JUST PLAIN Baffled.
I did everything I was supposed to do on this SETUP….
You just can't pull the trigger to EXIT with a loss,because those $$$ that you were making just won't leave your memory, and to think of TAKING a LOSS now just seems unbearable….
So NOW you HOPE, and PRAY that price gets to BREAKEVEN, and you make a DEAL with GOD that if it does, you will never be so GREEDY in your trading ever again.
But GOD seems to be on vacation that day, and doesn't seem to be answering.
Now your are in the hole 75 Pips and you had only wanted to risk 25 Pips on this trade……But you march on….
And then finally when you can BEAR it no longer, you decide you MUST hit the Close Button, and EXIT the trade with a 90 PIP LOSS, instead of a 30 pip Target that YOU Had decided on when you placed the trade in the first place
Without a doubt, the hardest part of trading is TRADE MANAGEMENT….You have to have BALLS of STEEL when you are trading without Hard Stops and Targets….
That’s why I prefer to place my Stop and Target in the market the very instance I place my trade, AND I don't OVERRIDE IT. It keep me DISCIPLED….
You dont want to get “CAUGHT LIKE A DEER IN HEADLIGHTS” otherwise you stand a good chance of turning that Winning Trade into a breakeven or even losing trade.
Does the following scenario ever happen to YOU?
Your trade setups, just as you had anticipated, and from the very onset of the Trade, prices start moving in your direction…..
Prices start moving toward your target zone….and finally approaches the mental target that you had set just below a Key Resistance Level…..
But you can see the MOMENTUM increasing as it approaches the
Resistance and BANG…...It breaks out of the Level with 2-3 Strong Candles…..
As you are watching this closely, you decide to mentally trail a STOP LOSS using a 14 period SMA or whatever……
Ok prices continue to PUSH HIGHER with NO END in Sight…...
And with No Major Resistance Level Overhead…..You decide to MILK this one for a Big Winner…..
Now in a Nice Healthy Profit on this Trade….getting ever so excited….You mind starts to wander….
In the back of your mind….you’re thinking about how you are going to take some of the profits from this BIG WIN, and buy a nice gift for your wife, and finally get out of the DOGHOUSE for whatever it is that you did that pissed her off last week….
While these thoughts are marinating in your brain...you notice prices pulling back a bit…..Oh just a minor retracement….NO Biggie….
It should bounce back of this 23% Fib retracement and continue….
But for some ODD reason its breaking thru the 23% Fib Retracement…
Ok likely a deeper retrace than I thought….
No Pain...No Gain….Let’s see what happens at the 50%....
Its gotta hold that level, the Momentum is weak to the downside…
It’s just some profit taking….That’s ALL…You tell Yourself...
By this time prices have gotten close to your entry point, and YOU can’t believe WHAT THE HELL IS HAPPENING…
It not SUPPOSED to do that…..IT Doesn't Make Sense….
Alright…So you come up with a BRILLIANT Idea on the FLY…
You Just Know that Prices Have to Go Up from Here….
So you Enter a Limit Order to Buy 2 more Lots at your original Entry Price, and Promise YourSelf, that the next time it gets to that earlier Swing High, you’re just going to Exit…..No IF, ANDS or BUTS
But NOW with twice the Profit…So you convince Yourself...
You get Filled on 2 additional lots, but There’s just One Problem…..
Price Starts spiraling down, as if it had no REGARD for your position…...At this point you are JUST PLAIN Baffled.
I did everything I was supposed to do on this SETUP….
You just can't pull the trigger to EXIT with a loss,because those $$$ that you were making just won't leave your memory, and to think of TAKING a LOSS now just seems unbearable….
So NOW you HOPE, and PRAY that price gets to BREAKEVEN, and you make a DEAL with GOD that if it does, you will never be so GREEDY in your trading ever again.
But GOD seems to be on vacation that day, and doesn't seem to be answering.
Now your are in the hole 75 Pips and you had only wanted to risk 25 Pips on this trade……But you march on….
And then finally when you can BEAR it no longer, you decide you MUST hit the Close Button, and EXIT the trade with a 90 PIP LOSS, instead of a 30 pip Target that YOU Had decided on when you placed the trade in the first place
Without a doubt, the hardest part of trading is TRADE MANAGEMENT….You have to have BALLS of STEEL when you are trading without Hard Stops and Targets….
That’s why I prefer to place my Stop and Target in the market the very instance I place my trade, AND I don't OVERRIDE IT. It keep me DISCIPLED….
No comments:
Post a Comment