Trade Management Continued...
Image 5: Note how price action does retrace, but doesn't come back into the 50% level. I have found it is more likely that price won't pullback into that level if the move is solid. If there is no more room in the trade to work it will fail, but then again you have no risk and have locked in profit on both contracts so whats the harm? We again have no risk here!
So the next action point is when price action hits the swing low/high at 0.00%. We again move our stop loss on the 2nd contract to the 23.6% level to again lock in more profit on our 2nd contract. Price action commonly fails at swing highs or lows in forex, so I want to bump up my profit i lock in on the 2nd position. If it has more room to run here it shouldn't retest 23.6%, if it does so be it, if not I walk away with lots of pips!
Image 6: Time to take profit on that last half position. I prefer to take profit at the -38.2% (or 138.2% extension depending on how you look at it). Note that if you choose to continue to let the trade go, I would again move the stop loss limit down to the swing low/high to again lock in more profits.
Image 7: You could choose to use some sort of secondary indicator for an exit on the last half position. I've found the slow stochastics on the base settings can be a good indicator of a trends exhaustion when the slow line (red line) enters the lower quadrant (<20) on the candle close. You could use a bunch of different indicators if you want, just one example of another way to exit the last part of your trade.
Image 8: A recap. Our inital risk is removed quickly and in the highest probability way. We take profits quickly and reduce risk to nill on the second part of our trade. We can have our cake and eat it too using this method and two contracts. Quick profit, and long term winning runners. All wrapped up into a systematic, consistent method to remove risk, lock in profit, and let profits run at the same time. And its a management technique that will work on any market, any time frame, and swing, big or small. What more could you ask for?!
Cheers!
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